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October 30, 2006
The Dashboard Makes The Difference
Today I had a great discussion and I learned how a dashboard can really make a difference. The case at hand is a manufacturer of prescription glasses. Not the frame, but the glasses itself. Lets call them ClearSight. Although the products are of high quality, this is not always recognized by the end consumer, who chooses a pair of glasses mostly based on the frame. The brand of the glass is not an issue. ClearSight doesnt sell to the public itself, it works through opticians. What can ClearSight do to improve its position in the market?
What traditionally happens is that ClearSight would start to build a brand preference with its target audience, so that consumers ask the optician for a special brand of glass. This would be a multiyear effort at a considerable cost. It would be better to build a brand preference with the opticians, as these are easier to reach through the existing infrastructure of doing business. However, it needs to be different than competing on price, as in the end that doesnt lead to loyalty, there is always someone who can do it cheaper.
ClearSight realized it operates in what I call a performance network. A performance network consists of all stakeholders that are involved in bringing a product or service to the market. In order to optimize business performance, stakeholders in the performance network realize they need to optimize the performance of the whole network, and not each stakeholder by itself. Stakeholders include suppliers, customers, society, regulators and other involved parties. ClearSight realized that in order to be successful in building loyalty with the opticians, while maintaining high margins, it needed to find a way to make the opticians more successful in the market.
ClearSight offers a marketing program to the opticians. When an optician guarantees a certain amount of business, it can apply for a membership with a trusted third party. The third party runs a marketing factory to produce mailings, a customer database to analyze and benchmarking information. All customer facing activities are done under the label of the optician, who basically outsources (part of) its marketing. The result is a double whammy loyalty program. First of all, because of the increased loyalty between consumer and optician. If a consumer is reminded once in a while to have his or her glasses serviced, do a new eyetest once in a while (in many countries this can be done by an optician), the consumer is more likely to come back for a new pair of glasses, obviously powered by ClearSight, and probably sooner than the consumer wouldve replaced glasses without these triggers once in a while. At the same time, ClearSight creates a much more meaningful relationship with the optician, that is based on process integration (through the trusted third party) instead of pure price negotiations.
Success is primarily measured in terms of return on investment for the optician. This produces a triple win: the optician increases its business performance, ClearSight secures its revenue stream and can improve its market share through better service and the trusted third party is paid per subscription, so it directly needs to keep the opticians happy.
The dashboard has a central place in the whole initiative, it functions as the main feedback mechanism for the optician. Through the dashboard, the optician sees how his or her sales is benchmarked to comparable opticians, what the customer satisfaction scores are (from the survey the third party runs with all customers), including a call-back list of people who had complaints, what the return is on direct marketing campaigns, and all kinds of information on the data quality, for the optician (who owns the customer data) to act upon. Ofcourse the dashboard contains data of all sales, and not just of ClearSight prescription glasses. The trusted third party is legally bound to keep that information hidden for ClearSight, who only gets statistics on how its own sales is going. The dashboard, not the quality of the glasses, is the competitive differentiator.
A wonderful example of information democracy in action.
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Posted by Frank Buytenkijk at 12:45 PM | Comments (0)
October 23, 2006
Technology Doesn’t Matter?
It is chique to say that in the end technology doesnt make the difference. That there is many ways to solve a problem. That in the end its all the same. It isnt. I have spent many years on both the technology and the business side. And I learned choosing the right technology certainly makes a difference.
Working with the wrong software is like driving a car where you operate the throttle with your hands and you steer with your feet.
Software is the instantiation of a certain business philosophy and different people may have different business philosophies. You shouldnt expect software to adapt to the business process. You should find the software that fits your paradigm. Think for instance of the big powerhouses, who speak to the imagination to IT driven organizations. They facilitate a strong IT governance. Or niche vendors, who focus on living in the business world. My business paradigm is a different one. I think success is in business and IT alignment, and see many of the elements needed for that in Hyperions System 9.
Hyperion System 9 basically consists of 2 parts: the Foundation and the Workspace. The Foundation is aimed at the IT department and contains the functionality to secure IT governance. But nothing more. Maintenance of business rules and master data is a user task. All user tasks are in the Workspace, providing self-service capabilities for the users. But nothing more. Data integration is an IT task. Our development department is working on some pretty interesting stuff, expanding on the business/IT alignment philosophy. Stay tuned!
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Posted by Frank Buytenkijk at 1:51 AM | Comments (0)
October 17, 2006
Great Performance, And No KPIs Needed
Just a quick post. Some great results do not need to be measured, do not need key performance indicators (KPI). Check out this link to a page of the website of my son:
http://www.freewebs.com/c2sper/mijngalerij.htm
Proud Daddy Frank
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Posted by Frank Buytenkijk at 1:23 AM | Comments (0)
October 13, 2006
BI = Business Interfaces
Brasseries de Bourbon, an operating company on Ile de la Reunion of beer brewer Heineken, has been pioneering the concept of what I have been calling business interface metrics for a few years now.
La Reunion found out that the traditional ways of target setting and ownership led to organizational silos and suboptimal results. For instance, it is in the best interest of the production department (a business domain) to have as large as possible production batches. The marketing department (another business domain), in the meantime, would prefer as many production variants as possible. The solution has been to introduce a shared objective and target between both departments called time to market”, to manage the business interface between those two business domains. Another example is the shared objective between HR and production, each being equally responsible for an efficient workforce planning.
Throughout the process La Reunion has developed some interesting insights into successful management of business interfaces, including its measurement. To show the concept of shared responsibility (part of the concept of business interface metrics) in a non-confrontational way, the Controlling department decided to measure its degree of health with an official performance indicator called total weight”. The weight of the three people within the department was not to exceed 250kg. Every month, in the management report, the team would have to comment on whether the team target was achieved . Brewery-wide, Brasseries de Bourbon organized a meeting for all process-owners twice a year. In this meeting, all participants would have to explain their processes, how they contributed to overall objectives, as well as to other processes, and what they needed from other process owners in order to be successful. Each process-owner would build a little stand and show what it was doing. In this way, the different process-owners would not only consider the needs of their process, but the needs of other process-owners as well.
Co-ownership was cascaded down into the organization. For instance, the Head of accounting department was made co-responsible for the days-sales-outstanding (DSO), a metric with great financial consequences, but which, as a process, was the responsibility of Sales.
Brasseries de Bourbon concludes there are a few essential preconditions successful implementation of business interface metrics. First of all, it requires a strong process orientation. Secondly there needs to be strong commitment of every director to focus not only on the business domain, but also on the interfaces, in order to optimize the performance of the organization as a whole. The targets on the business interfaces then need also to be connected to the bonus plan, so that there is a strong incentive for collaboration. Lastly, there needs to be an adaptive culture, in which the managers allow themselves to be coached by each other and are willing to change their plans if certain performance indicators show failing targets, regardless if this happens within ones own domain or someone elses.
This is perhaps the most important precondition of all: information shouldnt be proprietary and shared on a need-to-know basis. Successful collaboration hinges strongly on information democracy: an open sharing of information between the various stakeholders.
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Posted by Frank Buytenkijk at 5:16 AM | Comments (0)
October 5, 2006
Queen Beatrix and Business Intelligence
Ok, I made up a story. Its not true. Just trying to make a point. The story is about Queen Beatrix of The Netherlands. As a Dutchman, I thought it would be appropriate. Or... not too inappropriate.
The story is about the Queen needing a bit of money. She decides to open up the gardens of one of the palaces. As she is a clever businessperson, she creates a well-designed plan. At the gate there is an admission booth, where you can buy day tickets and season tickets. A few pathways are changed and a few trees are planted, to make sure the queen has enough privacy, while people are walking through the park. The queen thinks of everything, she even buys a little tractor to mow the grass, a few rakes and other tools. After, the park needs to look nice!
The plan is a huge success, and hundreds of thousands of people visit the park. But after the summer, the number of visitors collapses, as the park doesnt look nice anymore. How silly, the queen forgot one vital thing: to hire gardeners.
Duh....... Or not?
Rethink the story, but now with corporate data in minds. We invest heavily in the infrastructure, such as data warehouses, to make sure the data (= park) is accessible. There are many tools to manage the data, keep it nice and clean. But who owns them? Sometimes when I use this example, someone smart remarks it is the power users. But the power users are the seasons ticket holders. You cant ask them to maintain the park!
In our organizations we have an owner for everything. Capital is actively managed by Finance, Employees by HR and as my former colleague Andy Bitterer from Gartner would point out, most organizations even have someone responsible for minding the parking lot. But who minds the management information?
The biggest trend currently in BI is figuring out how to do that, and many organizations have set up a BI competency center... more on that subject later...
Wishing you sunshine on your walk through the park,
frank
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Posted by Frank Buytenkijk at 12:07 AM | Comments (0)
