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In this edition of The Voice of Business Growth:

  • Customer Satisfaction is Dead, Long Live Customer Value
  • Building A Strategy That Achieves Results
  • Achieving Shared Goals - Strategy Deployment
  • Telemetree Systems Unveils the Human Asset Dashboard™

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Customer Satisfaction is Dead or Why Companies Don't See the Value in Customer Satisfaction

Don't get me wrong, customer satisfaction can be an important operational measure for any business. Companies should have efficient ways of measuring how they are meeting customer requirements and effective processes to respond to out-of-control situations. However, if you want to grow market share and build competitive advantage, the focus must be on value.

Why not satisfaction? The key reason is that I've seen satisfied customers walk. Research has shown that satisfaction does not predict customer retention. Other reasons:

  • It's a lagging indicator. Not much can be predicted from satisfaction. Several studies have even found an inverse relationship between satisfaction and revenue growth. In one case, a company with a significant increase in
    American Consumer Satisfaction Index ratings slid into bankruptcy.
  • Satisfaction typically misses how you stand against the competition. How can that contribute to
    competitive advantage?
  • Satisfaction misses the unique interaction of the factors that drive loyalty. I worked for a company President who
    said that he wanted customers to be ticked off about the price but still coming back each year.
  • Customers get tired of answering satisfaction questions (they don't see the "value" in them). The response rate on customer satisfaction measures typically declines significantly over time as a result.

Why Customer Value? It's the best predictor of loyalty, overall competitiveness, and market share. By changing the focus from satisfaction, companies can deliver value and delight customers so that they can't walk away based on price alone. There are typically 3 components to a customer's value model: perceived quality (the full range of product or service performance characteristics) company brand or image, and price. Value models are developed with data from existing, lost, competitor's and potential customers, creating a much more robust picture than can be created in satisfaction measurement.

Customer Satisfaction is dead, long live Customer Value!

(For more details, check out research and articles by Reg Goeke at Market Value Solutions marketvaluesolutions.com)

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Five Keys to Building a Strategy that Achieves Results

It's the time of the year when many companies are delving into their annual strategy and business planning process. In a recent survey, senior executives at 197 large companies said their firms achieved only 63% of their strategy's financial performance potential. The executives agreed that strategy execution is more important than strategy development but 66% said they were worse at execution than development.

So how can you improve your company's Strategy Development and Execution? My experience indicates that the key lies in designing and delivering a strategy process that maximizes innovation, speed, decision making effectiveness, and accountability.

  1. Use a condensed, focused process

    With the right planning, design and expert facilitation, a comprehensive and innovative strategy can be developed in a much shorter time frame then typically expected. The design of the process and the techniques used to lead critical interactions must be spot-on. The secret to effective planning sessions is comprehensive preparation and design. A third party facilitator is essential since company employees (and even worse, the CEO) cannot maintain the objectivity required and often lack the required process skills. A skilled facilitator can also reduce the time required by 30% to 50%!

  2. Involve more than the Senior Team

    A study of innovation by IBM Global Services showed that outperforming, high revenue growth companies' most significant source of innovative ideas were (in order) employees, business partners, customers, consultants, and competitors. The message for strategy work? Include input from a diverse range of sources, particularly those not normally involved in business decisions. Both high potential and high professional (deep market and deep technical knowledge) employees can make a significant contribution to strategy development. Their involvement will not only improve the output but will contribute to building the commitment necessary for effective deployment.

  3. Use both qualitative and quantitative input

    Effective strategy work should answer two different basic questions: "How and where will we grow?" and "How will we compete?" Quantitative and qualitative data are key to answering both questions but with a different emphasis.

    "How to grow" is best answered by effectively gathering and synthesizing the knowledge from a diverse audience of industry participants. This knowledge can be informed by data but, as we know, forecasting has its challenges. Expert opinion and quantitative data combined through a rational decision-making process will produce the best, most reliable growth answers.

    Competitive advantage can be best determined through rigorously gathered market and customer data combined in a fashion that will reliably predict customer value. Competitive advantage is built by reliably measuring how customers define value, assessing your company's drivers of value, and understanding how value interacts with price and company image. Focusing organization resources on the key drivers will build and sustain advantage.

  4. Assure that the organization is capable

    Key #2 assumes that you have a team that has the capability to handle strategic tasks and that you have identified your high potential and high professional employees. If you are unsure of these capabilities, this needs to be determined before strategy development begins. Leadership must assure that the organization has the capability to handle the demands placed on it by the strategy. The demand must be assessed (i.e., What are the mission critical functions and capabilities, What are the pivotal positions?, What type of work culture is required), the organization capability must be analyzed (i.e., Do we have the right people in the pivotal roles, Are we filling the leadership pipeline, Does our culture support the strategy?) and any gaps addressed by a detailed organization development action plan.

  5. Use a comprehensive deployment process

    For effective execution, the strategy and value drivers must be obvious to all key stakeholders. Strategy Deployment techniques should assure a clear linkage from strategy to annual business plans to department/process objectives down to individual employee performance plans. Key process and performance measures should be prominent in all communications tools including company and process dashboards.

    The key here is the creation of a comprehensive deployment plan, using project and change management principles, with clear milestones, linkages, and accountabilities. Milestones should be short term to assure immediate application of the strategy and to demonstrate progress. The deployment plans should be regularly reviewed at the executive level and should include contingent and preventive measures associated with potential plan risks.

    For more thoughts on Deployment, check out Musings - Achieving Shared Goals

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Achieving Shared Goals - Strategy Deployment

I was recently asked for my thoughts on how to effectively link people together across functions to achieve shared business goals. I came up with seven:

  1. Keeping a focus on a "greater good" that can serve to break down functional barriers. The greater good is best defined from the marketplace or customer's perspective.
  2. A process that builds a clear and simple linkage and alignment throughout the organization so every one and
    every team knows the role they play in business success. This also helps clarify accountability
    and assures execution.
  3. A sound set of business measures - both leading and lagging - that can track progress and pinpoint variances
    that need to be addressed. This can also contribute to breaking down cross-functional issues.
  4. A detailed communication plan that clearly defines the messages, audiences, media, timing, and responsibility
    for the key parts of the strategy and business plan. This goes a long way in making sure key stakeholders
    understand shared goals.
  5. A disciplined process to address those that can't "get on board" or block the building of bridges, particularly
    those in mission critical roles or processes. Jack Welch and Larry Bossidy emphasize this in their success
    factors and Jim Collins highlighted it in his "Good to Great" research.
  6. Building accountability into the alignment process. This can be reinforced through linked performance
    management and compensation practices.
  7. Leaders who are skilled in getting the message across and coaching others to achieve shared goals.

The best example I've seen of building links to achieve shared goals has been in organizations that follow good Lean Manufacturing and Six Sigma practices (often combined and called Lean Six Sigma). The process is typically called Strategy Deployment and uses a variety of tools to assure that every employee in the business understands the business strategy, priorities, and the role that they play in achieving them. The process to link/align shared goals in businesses can also be effective in businesses that do not follow Lean Six Sigma principles.

With its emphasis on focusing on the customer, viewing business as a series of cross-functional processes, and doing continuous improvement work in multi-disciplinary teams, the practice of Lean Six Sigma naturally build bridges inside the organization. It also emphasizes the importance of linking those bridges to key stakeholders outside of the business, namely customers and suppliers.

A typical Strategy Deployment effort starts with the company's strategy and annual business plan. The key initiatives in the plan are clearly defined and then a process is followed to cascade those priorities down through the organization. Each function clearly defines the role they play in achieving the desired results and the measure that they will track to gauge progress. In some cases, each employee or team of employee builds their own annual performance plan based on the priorities as well.

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For Immediate Release

Telemetree Systems Unveils the Human Asset Dashboard™ to Enable Strategic Talent Management

Pittsburgh PA - Telemetree Systems has teamed with Dr. Charles Bishop, the founder and president of Chicago Change Partners, Inc., and Michael Couch, President of Michael Couch & Associates, Inc. to offer the Human Asset Dashboard™ a revolutionary talent management system. Human Asset Dashboard™ is based on Dr. Bishop's proven Human Asset Inventory®, creating a robust view of an organization's leadership pipeline of talent by melding an effective talent assessment process with Telemetree Systems' Cubeware, the powerful Business Intelligence software.

The Cubeware component of the Dashboard not only allows senior leadership to mine and turn their talent data into coherent and actionable information, it can be used to support a wide range of other business functions, such as monitoring sales/marketing efforts or tracking inventory.

About Telemetree Systems

Telemetree Systems was established in 2006 as a branch of Treehouse Software, Inc., a leader in systems software development and marketing since 1982, with over 700 customers worldwide. Telemetree provides innovative solutions that allow businesses to analyze and interpret data - transforming data into knowledge.

The company is privately held and is based near Pittsburgh, PA. More Information can be found at www.telemetree.com.

About Chicago Change Partners (CPC)

CPC was founded by Dr. Charles Bishop in 1999. Twenty years of experience inside major corporations undergoing significant change, such as FedEx, Baxter International, NationsBank, and a dramatic turnaround at ADT provide Dr. Bishop with significant "lessons learned" in dealing with leadership in driving organizational change. Realizing this experience was of great value to most organizations, Dr. Bishop formed a team of highly experienced executives who have also "been there, done that."

More Information can be found at www.chicagochange.com.

About Michael Couch & Associates Inc.

Michael Couch & Associates Inc. is a versatile consulting practice focused on dramatically improving the capability of organizations, teams and individuals.

Mr. Couch has made a career out of improving the effectiveness of organizations, both as an internal consultant and as a business executive. Starting from a graduate degree in Industrial and Organizational Psychology, he has over 30 years experience working on a wide range of organization challenges at the team, facility, division and corporate levels.

More Information can be found at www.mcassociatesinc.com.

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