19 Jan Focus on the Process, Not the Product or Service
With Alabama winning the national championship this year, I am once again reminded of coach Saban’s focus on “the process.” The reason that coach Saban is so successful is just that – his unrelenting focus on “the process.” Less successful organizations don’t focus on the process, but rather focus on the product. The product is what they produce for customers, be it a tangible product or a service (intangible product). The most successful organizations focus on the process.
A product-focused organization tries to ensure customer satisfaction by inspecting the product or service before it goes to the customer. This means costs are incurred to inspect for errors or defects and then more cost is incurred to fix any problems that are found. Focusing on the product is a very inefficient and expensive way to run an organization. It is true that you can inspect in quality in from a customer perspective in some cases, but it is very costly and inefficient.
A process-focused organization takes a more proactive and preventive approach. It looks at the process and the inputs to the process and strives to improve them. This is extremely effective as “product follows process.” That is, if the process is sound, the product or service it produces will always meet customer requirements. This proactive approach to improving the process reduces the number of errors or defects that the process will produce. As the number of errors and defects fall, the organization can stop expending scarce resources looking for problems and fixing them. In this way, process thinking and activity not only improves quality and customer satisfaction, but also reduces costs and improves profitability.
Organizations would be well served to take a page from coach Saban’s playbook. Stop focusing on the product or service and focus on the process.
Meeting Customer Requirements is Not Enough
Traditionally, organizations make judgments about their products and services by comparing them to the customer’s requirements. Lean Six Sigma says that it is not sufficient to meet the customers’ requirements; what is desired is to precisely hit the customers’ target each time. We say the process should be “on target with minimum variation.” Lean Six Sigma takes this approach because customers do not see quality as “meeting customer requirements.” This definition of quality implies that all outputs that fall within the requirements are identical from the customer’s perspective and that all outputs that fall outside the requirements are likewise identical. This is not how customers perceive services and products; they see quality as “distance from the target.” The closer the product or service comes to the customers’ target value, the higher the customers’ perception of quality and the higher the level of customer satisfaction.
To understand this concept, think about an emergency room at a hospital. It is very common to see hospitals advertise that you will wait no longer than thirty minutes before seeing a doctor. If the hospital ensures that you see a doctor in less than thirty minutes, they declare success. It does not matter whether you see the doctor in one minute or twenty-nine minutes; both are within the requirement and they are the same. However, from the customer’s perspective, 1 minute is much better than 29 minutes. Both meet the requirement, but they are perceived quite differently by the customer. After all, the target wait time is zero and one is closer to zero than thirty.
Another example, this on from my past, is raw materials in a manufacturing plant. We had a supplier that shipped product was quite different from truck load to truck load. This caused us to have a decrease in productivity every time we started on a new batch of this supplier’s material. When we complained to the purchasing department about the quality issues, there response was “all the batches meet the specifications.” The problem was the batches alternated between just above the lower specification and just below the upper specification. The supplier failed to understand that what we needed was material that was on target with minimum variation, not material marginally within specification. Eventually, not able to make progress with the supplier, we found a new supplier and pulled the business.
Meeting the customer’s requirements 100% of the time does not ensure customer satisfaction or loyalty. Only by going beyond this and getting processes “on target, with minimum variation” can you differentiate your organization and go from merely adequate to great.
Don’t Wait Too Long
I was recently contacted by a senior executive at a corporation that had grown rapidly over the past few years and now had more than two thousand employees. They were struggling with human resource issues such as hiring and onboarding, and were experiencing increased levels of turnover.
One of the primary root causes of hiring issues was that individual hiring managers were taking vastly different approaches to the hiring process. The issue was that the company had failed to put in place strong processes and hold people accountable for following them. The time to put processes into place is not after the organization has grown to the point where their absence creates issues. It should have been done years ago, before the rapid growth took place.
Of course, everyone says that they were too busy to take the time to create a value-added, documented process and to train hiring managers. In fairness, creating good processes and documenting them does take time. In part, because it is not acceptable to just document what people do, but processes should be based on best practices, which can be understood using techniques like benchmarking. They also need to strike the appropriate balance between rigidity and flexibility. In this way, they enable the organization to improve both its process and financial performance.
The cost of process failures today dwarfs the cost of creating and managing a robust process by at least a thousand to one. The costs of losing the best potential candidates to competitors because of constant delays in the hiring process, hiring the wrong people thus reducing organizational performance, and increasing turnover due to bad hires. These are costs that measure into the millions. For a relative pittance, these problems could have been proactively eliminated saving millions of dollars, not to mention the management time consumed with these issues.
As an organization grows, it requires more structure around it’s key processes. Smart leaders and managers put strong processes into place proactively, before the business is damaged by their absence.