Macabre metrics: Quarrels between departments

It was a one ordinary day at my startup. Around 10 am, my sales team would come to me to complain: “The operations dept is so annoying! This client – whom we have chased for months – wants us to deliver on Thursday. But the operations dept insisted they would deliver according to SLA, which was Friday.”

At 10.15 am, the Head of Operations would come to me and complained: “Your sales team thinks the whole company revolved around them! I have set rules and SLA to make the operations process regulated. Why can’t they follow the schedule?”

That kind of quarrel happens almost every week, with little improvement after each case. Now that I’m observing from outside the company, I can see more clearly what’s going on. I think the main problem lies in the KPI/metrics.

What gets measured gets managed. And the more frequently you got feedback about something, the more likely you are going to work on it. 

Now, if the target for sales dept was the $$$ value of sales, they would do whatever it takes to sell, including offering ridiculous discount or giving empty promises to the clients. And if the target for operations dept was merely cost efficiency, they would not care if the clients’ hairs turned grey waiting for the delivery.

In the ideal world, of course, the metrics should ensure sustainable growth and long-term value creation as opposed to short-term wins. There are two widely-used sets of metrics: HEART & Pirate metrics.

HEART is the acronym of Happiness, Engagement, Adoption, Retention, and Task Success. While Pirate, well, what sound does a pirate make? “AARRR!” and it stands for Acquisition, Activation, Retention, Referral, Revenue.

If, for example, customer happiness was the KPI for all departments, everyone would thrive to deliver the most delightful customer experience. The quarrel between departments were minimised because they were all fighting for the same target. And as we’ve agreed that there’s no such thing as multitasking, focusing on one KPI in one period of time is the wiser choice, rather than try to accomplish everything and achieve nothing. That one single KPI has to be emphasised again and again to the whole team, and also has to be tied with reward and recognition.

However, obviously, don’t take this advice to the extreme side and spend the last millions of dollars in your bank account to make your customers happy – and then die tomorrow.

 


(Disclaimer: I’m not claiming to be the expert here. This is just my reflection. Any thoughts are welcome!)

Be comfortable in the ‘zone of uncomfortable debate’

How many hours do you spend in internal meetings every week? How many times do you leave the room without achieving anything productive?

In my startup, I used to spend lots of times discussing problems. Usually the trigger was a complaint from clients, caused by some errors by IT or operations team, and those errors were caused by unclear instructions from sales or product team, so on and so forth.

Usually some certain people would start to be defensive, and others would try to mediate and make jokes to lighten the situation. In the end, people left the meeting room feeling better about themselves (“Yay, so the complaint was not entirely my fault!”), until a similar error happened again.

From my favourite professor, Prof. Cliff Bowman, I learned something new: “Team” is not good in senior level. Fear of hurting team harmony is not something a manager should have.
In every meeting, usually there are two zones: zone of comfortable debate and zone of uncomfortable debate.

ZOUD_diag.jpg

In the first zone, we are discussing light topics and fun options. “We know we are not gonna do this, but it’s fun to talk about.” It’s dangerous if your meeting is still in that zone. 
Instead, we have to learn to discuss in the zone of uncomfortable debate (ZOUD). How?
  • Dig the root cause of the problem (ask 7 why’s if necessary), then move on to solutions. Stop dangling on whose fault it was.
  • Stop being personal – this is not about you. We are all here because we care about the same company, and we share the same vision.
  • Critique the works or the actions, not the people.
And more importantly, leave the ZOUD before leaving the room. If you are not mature enough to do it, then maybe you are not supposed to be in that room in the first place.

Your customer needs a hole, not a drill

Guess, who is the biggest threat for an airline whose customers are businessmen?

a. Another airline
b. Budget airline
c. Skype

Yes, the answer is C: Skype. Businessmen who used to fly once a week from London to Paris, for example, now only fly once a month. Three other face-to-face meetings are replaced by Skype meetings.

The business landscape are changing rapidly. Your competitors will come from places you never expected. It becomes more important than ever to ask this question to yourself:

What problems am I solving?

The legendary Harvard marketing professor, Theodore Levitt, phrased it this way: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!

If I needed a hole for some reason, I wouldn’t buy a drill, actually. I would go to TaskRabbit to find other people who can do it for me. Or I would borrow my neighbour’s drill via Streetbank. What’s the point of buying something that I would use once a month, or even less?

This paradigm shift brings us to “Product-Service System” era. Companies no longer provide mere product or mere service; they combine both to serve customers in better ways. Here are three possible ways to implement it:

  • Focus on optimising product usage – the products are still owned by customers, but you provide extra service to give them better experiences. Eg: Xerox PagePack presents a contract that includes ink, paper, regular service and maintenance by Xerox engineers.
  • Focus on usage, not ownership – your customers don’t have to own everything. Just give them access to the product they want, when they need it. Eg: average cars are only moving 5% of the time (the other 95% are sitting in your garage or in parking lots) – it makes perfect sense to do car sharing via Uber, Zipcar, or BlaBlaCar.
  • Focus on result – your customers only pay for the result, and product involvement is optional. TaskRabbit I previously mentioned was one of the examples.

By constantly focusing on the problems instead of the products, you would have a better chance to compete in this ever-changing world.

 


Adapted from: Tukker, A. (2004) ‘Eight types of product–service system: Eight ways to sustainability? Experiences from SusProNet’, Business Strategy and the Environment, 13(4), pp. 246–260. doi: 10.1002/bse.414.