We’re running hard, getting better, but we don’t seem to get there in time….

By John Evelyn  |  May 29, 2009  |  Agility,Capability,Execution,General,Rigidity

I spent many of my business years in an era chock full of predictability. In fact, once upon a time, I was responsible for forecasting and business intelligence. While it was a task with challenges and full of fascinating insights, achieving excellence in performance was never in question. Once we got the process down, life was good and getting better was doable, over and over. Those days were ripe for the explosion of the process improvement movement, the TQM big bang. As part of that movement, we were able to change how the world conducted business and how to make life better for ourselves and our customers. The repetitiveness of many work streams enabled all kinds of ways to control variation and keep customers buying, or taxpayers paying. Critical to success then and now is the ability and execution to clearly and objectively understand what “it” is that the customer expects to pay for, the specifications, the lines in the sand. Of course, a few lines could not be drawn so we did what we could with what was then available, or tried and tracked until we honed in.

Process improvement has evolved, improved, taken full advantage of technology, software that has taken analysis from the hands of only statisticians, into mainstream operational excellence. The success stories and benefits of application of discipline and tools to improve process performance are astounding. Controls are upstream and plenty of calamity and pain is now prevented across virtually every type of enterprise. There is no question that this will remain true in perpetuity …. That is, it will forever be true for the stuff that repeats and does so with stability. We have wonderful crime scene investigative knowledge, talent and a tool sets that almost always catch the repeat offenders.

If this last year made a single point, it may well be that predictability and stability may have been voted out of office in some districts and the volatile and dynamic party is in office now. Many forecasts have much greater levels of uncertainty and plenty of models have crashed, leaving fear and financial timidity in their wake. In other words, some of the lines in the sand were washed away and some are moving around.

I’ve observed that many organizations are diligent in surveying markets, competitors and customers, working hard to understand needs and launching initiatives to meet those needs. Yet, by the time some of these efforts to achieve change or to improve performance finally deliver the desired results, the customer’s needs have changed again. The disappointments are costly for both the organization and the customer. What follows is a domino effect cascading down the business supply chain. For the unfortunate, that feedback signal comes in the form of reduced demand for products and services.

There are a myriad of analogies that make the point, so let’s think about a sports one (there is one for virtually any sport we pick). Imagine the recent Summer Olympics with the excitement and attention the swimming competitions stimulated. What if, on the date of a key relay race, the host moved the event to a pool of a very different length than the standard, or decided that the four leg relay would be five legs or three, or requiring a brand new stroke?

Scary thought, yet many enterprises today struggle with these types of challenges. My impression so far, is that performing to moving requirements is not going away. Still, each storm creates lots of opportunity.

Does this ring true?

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Comments

  1. John

    I think your post is dead on and I think the financial services industry may be the best case in point. The industry relied on rear-facing models and assumptions. When banks thought about credit risk, residential mortgages were always at the bottom of every list in terms of risk. As the liquidity bubble from Asia grew, the spreads on those assets narrowed which drove many banks deeper into the credit spectrum. I can’t tell you how many times I heard bank executives say that housing prices have never declined!

    Challenge the paradigm, things change! Organizations can rely too much on the past and not take enough risk to think about what could be.

    For me, the housing market collapse seemed like the easiest thing to spot. I felt like I was standing on the track with everyone else, but used good judgment in jumping off. Look around at the risk factors 1) double digit price appreciation 2) low single digit income growth and exploding consumer debt. It was obvious it could not be sustained, but many organizations were intransigent in their beliefs that mortgages were the safest assets in the world.

    Phewy!

    Perspective – Gain the edge!
    Steven D. Audino is CEO of GlobalBankVision Consulting.

    GlobalBankVision Consulting, Inc. is a knowledge services practice that enables its partners to gain the edge with world-class market intelligence and thought leadership on retail banking.

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