Many metrics exists to focus an organization on important organizational objectives and drive the company forward.  Key organizational metrics are more controversial.  Many organizations will focus on revenue, profit, and growth as “Key” measures of success.  Yet, all three are lagging indicators and will not tell you the whole story about your organizations prospects.

Revenue does not say anything about your foundation.  Revenue can rise due to asset sales, unprofitable discounts, or realizing future revenue today.   Profitable revenue is more important yet profit is an accounting number filled with depreciation, amortization, absorption rules and tax effects.  Growth sounds great but can hide failing products, while horizontal growth can spread the organization too thin.

So what is an organization to do?  Produce a balance of leading and lagging indicators for your success.  leading indicators represent metrics that forecast a high probability of future success.  For example, the relationship you have with your customers can say a lot about your future sales, you competitive advantage, and your prospects for future growth.

Below are Ten Leading Indicators of Organizational Success

1. Communication Effectiveness – Did your employees understand, not just hear, your latest communication message?  Sure you said it in your last meeting, newsletter, memo, or web page, but does anybody understand it.  How would you know?  Did you use a test, quiz, or did someone repeat it back in different words?  Do you have a measure for the effectiveness of your communications?
2. Customer Relationships – We are not talking about customer satisfaction.  Often times a customer may be satisfied but what is your relationship index with them?  Relationships are two-way streets.  How do you feel about them?  Do they pay on time, generate enough revenue, and are they easy to work with?  Focusing on customer satisfaction alone could lead to unprofitable customers.  Sure the customer is always right but are they the right customer for you?  Do you have a measure for customer relationships?
3. Employee Satisfaction - Happier employees will lead to happier customers.  Do you have an employee satisfaction index that measures: absenteeism, complaints, turnover, and surveys?
4. Brand Image - This is about more than recognition, brand image is a leading indicator of success regarding how people feel about your organization.  Use market research and survey your market to determine if your brand image is rising or falling.
5. Distraction- Everybody has a job within your organization but how much time do they spend on what they were hired to do?  Do you have a measure for administrative tasks, quality improvement, and other management assignments?  In lean we try to eliminate this waste.  How much time is spent on those tasks management asked you to do but are not part of your job description?
6. Trust- Do people believe in your organization/leaders?  You could call this the “foot-dragging” index.  If people do not believe in their management then they will erect barriers that will slowdown the implementation of any management program or initiative and customers will stall and stop buying.  Do you have a measure for determining your organizations level of honesty and integrity both inside and outside of your organization?
7. Customer Frustration – Don’t you want your customers to have a consistent and beneficial experience with your organization?  So how do you seek out, count and measure the aggravations, frustrations and negative surprises that your customers experience as they do business with you? I know that most companies do not measure this because every major corporation has a phone tree you must navigate to talk to them, and then you are put on hold, only to talk to the person that cannot help you.  Frustrated customers will eventually abandon your organization in search of a more pleasant vendor experience.  Are you measuring customer frustrations?
8. Supplier Relationships - Just like customer relationships, supplier relationships must be measured too.  How easy is the supplier to do business with? Are they responsive to your needs? Is their quality more than sufficient?  Suppliers provide inputs that are, in some way, passed on to your customers.  Garbage in equals garbage out so how do you measure your supplier relationships?
9. Project Management - Every organization has projects, either for clients or for internal customers.  The better your organization is as delivering on project objectives, the more effective and efficient it will be.  How do you measure a project’s budget and cost performance, schedule completion, quality and even innovation?
10. Employee Competence - This is more than just training hours, it is about actually learning something useful to your job.  To do this right is difficult.  You might develop a competency matrix defining the required skills versus the required skill level.  Then measure everyone’s current skill as a percentage.  The gaps indicate the training required to move the organization toward higher competence.  Are you measuring competence?

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… C: wait…

There are few people in the U.S. — and not a lot more around the world — who are unaware of the health care insurance crisis in this country.  The answer, for whatever reason, is as it always has been: let’s make a law!

But what kind of law?  ”Too many people are without health care insurance!”, cries one side.  ”We can’t have ‘socialized medicine’!”, cries the other side.

“We must seek compromise!”, cries a voice from the middle.  Politics is the art of compromise, right?  If compromise is “the art of dividing a cake in such a way that everyone believes that he or she has the biggest piece” (bonus points if you can guess who said that)…yes, I suppose politics could be an answer.

In reality, we know it is not.  We know that whoever writes the laws stands to gain the most if those laws are passed.  This is true not just of the USA, but of every country on the planet.

There is an effective solution out there that we seem to be conveniently overlooking.  That solution is ISO 9001, “Quality Management Systems-Requirements”.  According to the standard, key to an effective quality management system is meeting — or exceeding — customer requirements.  The product — in this case, health care insurance — must satisfy customer requirements above all.  The customer is so important that three clauses are devoted exclusively to the customer: clauses 5.2 (Customer Focus), 7.2 (Customer-Related Processes), and 8.2.1 (Customer Satisfaction).

And just who is the customer of health care insurance?  Well, who’s supposed to be reaping the benefits of the product?  There are two customers, actually…

• The people being insured, and
• The health care providers.

Who aren’t customers?  Pharmaceutical companies, medical equipment manufacturers, lawmakers, lobbyists, ad nauseam.  My advice to President Obama — and to any other world leader, for that matter — is to develop a health care system that complies with the requirements of ISO 9001, and ignore anyone and everyone who calls for legislation.  Don’t forget — the ones insisting that legislation is the answer are often the ones who stand to profit the most from it.

Whether you agree or not, let me know what you think.

On June 1, 2009, GM officially declared what many of us had known for decades: it is unable to compete in the global marketplace.  The fact that it can’t even compete in the US market, where it got its start a century ago, shows how far the mighty can fall when they’re not paying attention.

There are many reasons for GM’s failure, including:

• Its sheer size and the attendant inefficiencies
• Corporate hubris (perhaps reflected in the famous statement, “What’s good for the country is good for General Motors, and vice versa.”)
• An outmoded business model

But perhaps most importantly:

• Lack of customer satisfaction.

ISO/TS 16949, the automotive quality standard similar to ISO 9001 and based in part on QS 9000 — a standard developed in part by GM — places a great emphasis on satisfying customer requirements.

Customer requirements are often fact-based (e.g., safety standards, legislation) but just as often, they’re based on perceptions.  A company can compile the most lengthy, detailed checklist of customer requirements yet miss a lot of important information when that checklist is not reexamined on an ongoing basis.  If that checklist becomes the “Commandments of Manufacturing”,  the company using it runs the greatest risk of all.  Ask GM.

This is a lesson every remaining business must take to heart.  So, ask yourself: When did you last have an open, honest discussion with your customers (maybe not all, but certainly your best ones) to see how they feel about your goods and services?  Do your customers consider your product – your company – useful and relevant?

When did you last reevaluate your definition of your target customer?  Do you use the “best” tools for getting and evaluating your customers’ perceptions?  Are you doing all you can to cultivate customer relationships?  To maintain them?  Are you making an effort to anticipate customers’ needs?  Are you listening?

Sitting here at Soulard Barber Shop Saturday morning, I am reflecting on the IT Innovation Conference I attended last week in St. Louis. First of all, it was satisfying to see more than 500 IT professionals, infrastructure managers, staffing providers, storage, and computing vendors and CIOs gathered at a regional conference amidst the poor economic news of our time.  But it made sense, in light of the “glimmer of a turnaround” described in the closing keynote by CIO magazine publisher emeritus Gary Beach. Perhaps those who showed up had sensed the same. It was reassuring.

But even more reassuring was the talk of planned projects and ongoing implementations. One company was bringing a supplier management program on line. Another was doubling data center capacity to support an anticipated spike in consumer demand. Yet another was implementing an electronic records conversion across dozens of hospitals. (Check out the meeting agenda.) What was reassuring was not only the volume of activity presented in sessions and discussed in the hallways, but also the realization—in demonstrable, robust terms—to what exactly is required for success: great communications.

More so than in years past, project managers showed how they involved users from the very beginning, long before requirements were set or vendors were selected. They described involving users in large collaborative sessions to define requirements and evaluate vendors against requirements.  One healthcare company went so far as to invite three vendors in for a long weekend of product demonstrations and working sessions, and hundreds of professional employees showed up voluntarily on their weekend to participate!

Nobody wants to feel like an IT implementation was done to them. Users need to feel buy-in, like they helped design the solution. If they designed it, they will use it, and you will get a return on your IT investment, now, and throughout the system’s life. Since every system falls short in some ways, users must be committed to helping you improve the system. That implies that you, the project champion, have a communications plan. And that plan has to foster three-point communication:

• You gather input, often from users.
• You reflect back what you heard in some demonstrable way, such as in a beta test or feature set.
• Your user acknowledges—ultimately through increased usage—that you heard them and acted appropriately.

No matter how great your technology, communications must be robust. Prior to launch, gather input. Reflect what you heard with written requirements. Involve users in source selection and beta demonstrations. Build in channels for active and frequent user response. If users are not coming to you, go to them. That’s what so many of this year’s conference presenters demonstrated.

Read about next year’s IT conference in Saint Louis.

In the office—and on this blog—we throw around the term “effective communication” a lot. In a previous post, I talked about how your entire chain of dealing with suppliers, employees, and customers should be centered on effective communication—that is, clearly explaining your products and requirements and listening and understanding others.

Do we effectively communicate with our website?

You may think you do a good job of the latter. You have a method for collecting customer requirements and feedback. You have open channels of communication with your employees and suppliers.

But what about the former? How clearly do you explain your own products and services?

We’re working on a new website that will more explicitly state the services we provide to other companies. It’s a big part of our product offering, but until recently, it’s been a small part of our website. In formatting the homepage, navigation, and other design aspects, we’re constantly asking ourselves “What would make the most sense to the customer?” It doesn’t matter what you think about your products or services. What are they looking for?

This can be very difficult to use the right words when you’re selling customized services. But when you make sure the focus is on the customer—or flat out ask the customer for their opinion—it makes things easier.

When was the last time you asked your customer whether your communication is clear to them? Have you changed text or visuals based on customer feedback?

This post is about effective deployment of Voice of the Customer (VOC), quality-speak for taking action to reflect what your customers want in your products and communications. This is a continuation of yesterday’s post. Yesterday, Company ‘A’ failed to adjust its product offering and marketing messages to match customers’ desires, and suffered for it. Today, Company ‘B’ gets it right.

When Company B got its foot in the door of some big-time potential accounts, it heard what customers said, and reflected those perceptions of value in its product offering.  Company B took action to sell what customers wanted right away, and then set out to increase the value of their services over time as their customers came to trust them. 

Company B also listened to the language that potential clients used to talk about their problems, and then employed that language when describing their services.  Company B took to heart what it learned in half a dozen customer interviews to focus its product development and marketing message on recognized benefits.

As the selling proposition shifted to incorporate the voice of the customer, potential clients quickly recognized the value of the service that Company B offered.  They could get exactly what they wanted and needed from Company B, and they were willing to pay for it.  More and more frequently, when Company B got their foot in the door, they settled in for a nice long stay.

 Listen to Customers, Sell More of What Customers Are Buying

When interviewing our client’s customers, we listen for what they value. We listen for what they are paying for today. Then we help customers focus their product development resources on what they can sell today. With increased sales, we can help our clients build organizations that deliver value consistently, thus building trust with their customers. Trust is a solid platform on which to deliver increasingly valuable and unique services, thus achieving our strategy. Without first building trust, strategy is simply an aspiration with no concrete steps.

Truly hearing the voice of the customer means reflecting back to them in your own language what customers truly value. Adjusting your products to provide that value demonstrates that you are truly listening.

Company A’s corporate customers thought they were buying the time of skilled installers and customer service troubleshooters on demand. In an effort to be different from its competitors who also sold skilled labor hours, Company A offered additional benefits that its skilled workers brought to the table such as cross-training and process improvement.

At first, “differentiating” the marketing message seemed like a good idea.  Essentially, Company A was offering higher levels of service that it said would help customers improve operations and save money. But when interviewed, customers didn’t seem to get it. They resisted the idea that contract hires were in a position to influence substantial changes in business practices within their companies. Instead customers said they would rather pay less and get just the services they valued.

But customers did say that Company A provided rapid availability of highly skilled, highly specialized technicians. And they would even pay a little more for what they perceived as consistent well-managed delivery of the right skills at the right time.

But Company A was unwilling to change its story. Rather it persisted in a story that was out of sync with the voice of their customer. Company A failed to separate its aspirations for the future with the current perceptions of its paying customers. But you can only ignore the voice of the customer for a time.

When the recession hit a few months later and corporations sought to cut expenses, services they did not immediately value were hard to justify, and easy targets. As a result, Company A lost several customers and a double-digit percent of its revenue.

Tomorrow, read about Company B.  Because sometimes, listening means changing your story.

“Let me get this straight: you’re going to make this change because you want to, not because 12 months of research told you to.”

I was out for coffee with a colleague last week, and he was telling the story of a stubborn manager who didn’t understand that his brain didn’t house the collective needs and desires of his product users.

My friend’s company had spent 12 months interviewing staff members at a global Fortune 500 company in order to get an internal program working correctly-that is, the way staff members needed to use it.  After his company redesigned the entire interface, correcting many of the problems and cutting down on staff lost time by 200%, the manager had a complaint.

He didn’t like the colors.

Nothing in the research or data indicated it would benefit the customer to use a specific color palate, and actually, the palette my colleague’s company chose was more efficient and less distracting from a user’s perspective.

But the manager wanted his colors. Bright orange. Yellow. Pink. … Hello distraction.

Most companies don’t put in the time and effort (and money) to conduct such thorough research and gather customer requirements, so I applaud those that do. However, what is worse: not spending the money, or gathering the requirements and then changing them to fit your view of what your customers-or users-want?

As I wrote in my past two posts, customer input equals a successful product. So why do so many products make it to market without the customers’ point of view in mind (and fail miserably)?

A customer representative in the decision-making process is essential. Whether this is the project manager acting on behalf of the customer, or better, an actual customer, hearing and understanding that perspective adds important insight to your product definition.

This is not to say that the customer representative designs the product, but certainly a customer’s input needs to be inserted into the process as more than just an afterthought.  As Scott Bellware writes in his post on customer service:

“As a product designer, you should already know what it is you’re building. You should have a strong vision for the product and already have a visceral sense of the customer’s expectations, needs, and desired customer experience.”

It’s not something that enters the project after the fact. You should have a “sense”–or, more like a validation–of your customers’ needs and expectations as input in the definition and design phases.

Customer representation validates what you’re doing and lets you know the product would actually appeal to your target customer. It’s more than creating a customer feedback outlet for a product that already exists.

How do you represent your customer in the development process? Does the project manager stand in? Do you solicit actual customers? How does it work for you?

In today’s article, I write about how important it is to know what your customer is thinking. If you haven’t talked to your customer lately, how do you know that you’re meeting their needs? Sales numbers are certainly telling, but they don’t tell the whole story. What if there is a completely untapped market because you don’t understand the needs, values and perceptions of those who want to–or MIGHT want to–buy from you?

When I’m working on our websites, I employ similar methods. We receive a lot of customer questions concerning how they can edit our policy and procedure manuals, so we’ve tried to play up the fact that they can be downloaded in Microsoft Word, so you can change any of the text you want. It’s a simple example, but it’s one that many companies may not think of on a grander scale.

Get out there and talk to your customers. They may tell you something that changes your entire strategy. Or, maybe, you’ll simply learn something new about them.