International Process and Performance Institute

I recently received an email query from a member in regard to Process Activity Lists (PALs) I would like to share because it was an outstanding question and one I think a lot of members might have.   The query was:

Hello,

I am puzzled how PALs (Process Activity Lists) can be used to fully represent Processes. I am used to working with BPMN and divergent paths based on decisions (e.g. if product is IN STOCK follow one path, otherwise follow another). I am not clear how PALs represent this. In the CEM Optimize method, sequential activities, allotted to an actor, are joined by a line ... if a decision point were reached, then the line would surely split. For example, suppose that the case study referred to provision of internet services and a diagnostic revealed a line problem versus a router problem or a customer configuration problem. Further suppose that each diagnosis required different subsequent flow... How would a PAL represent this?

To appropriately answer this question, we need to start by putting anything we might use to represent a process in proper perspective.  No mapping tool or map can "fully represent" a process as anything we develop to represent the process is an abstraction (i.e. the map at some level represents the thing but is NOT the thing).  What we need to consider is what level of abstraction is relevant to any given process related activity or objective. 

One of the best examples of this principle is the use of mapping or GPS software for creating a travel route.  When our objective is to see the overall route and/or our relative position on the route, it often requires a higher level of abstraction (the big picture).  However, when we are trying to navigate at the street level, a much lower level of abstraction is required.  The original high level view is of no help at that point and visa-versa. 

When it comes to process, if our objective is to provide detailed documentation of a process for system development or other detail oriented reasons, a PAL is not the right level of abstraction.  However, when performing Optimization or Alignment analysis, it is exactly the right level of abstraction because it keeps us from the detail which does not help us in those activities.  In fact, it is often a high level of process detail that gets process improvement activities mired and "lost in the weeds."

Of course it’s not just the increased value to the customer that drives these companies to do what they do. One of the biggest reasons they do “it” is because improving customer experiences (really improving them) has a double benefit. It decreases the cost of operations while improving the customer experience.

That statement can start some arguments by people who believe that improving the customer experience requires more employees, more work and (heaven forbid) the willingness to give more to customers without increasing what the customer is charged. But consider this, when we are really improving the customer experience we are eliminating the reasons the customer needs to contact us and the Moments of Truth (interactions) that occur when we do. There’s only one way to do that, sophistication.

Sophistication follows from the inspiration by Leonardo da Vinci (“simplicity is the ultimate sophistication”) where he was very intrigued by the challenge of resolving complex matters to their simple – shall we say quintessential – form. It’s like the chipping away of the unneeded parts of a stone to reveal the art form hidden underneath, refining by removing the “dross” if you will.

That kind of refinement will dramatically reduce the work of the processes behind the “customer processes” – and that means they cost less for us to operate and maintain them.

So when we really start improving these customer processes our operating and maintenance costs will also decrease – sometimes as much as 200 or 300% from where we started over several refinement iterations.

How much do you think it costs Virgin Mobile USA to facilitate the sign-up of a new customer? Compared to say AT&T or Verizon? How much do you think it costs State Farm to implement the homeowners small claim process with 3 Moments of Truth compared to the competitor’s process with 13 Moments of Truth?

We are hard pressed to get the return on investment of EITHER of these values that can be derived from innovation on the customer experience let alone both from the same set of actions!

Like a good neighbor, State Farm is there... and the company takes that motto very seriously.

While it may be surprising to find that State Farm as a company believes very strongly in the unique and important purpose of insurance – the ability to mitigate the impact of unforeseeable and uncommon events by aggregating the risk over a large “pool” of people – this is exactly what they do believe. It makes sense, is a valuable service and stands alone as a business case, yet few insurance companies operate that way anymore.

So for State Farm customers, when something “bad” happens State Farm is “there” with incredibly simple “processes” for getting whatever happened put to rights.

You know the whole “good neighbor” thing comes from times past when a family would suffer a tragedy such as their house burning down. Their neighbors would take the distraught people into their homes then organize a “house raising” to get the family back into a new home quickly through the combined efforts of many.

State Farm still retains much of that mindset, and their customer processes are very streamlined – often imposing no extra activity on the customer or even taking steps to reduce the activity the customer must do to restore things back to the way they were.

When contrasted to one competitor, State Farm’s homeowner claims policy had 3 Moments of Truth while the competitor had 13. Which process do you think you would want to “experience” when you’re trying to get something fixed on your home?

Other effects? Elapsed time competitor, 21 days. Elapsed time State Farm 48 hours. Cost (to the customer): Competitor 300% greater than State Farm. Cost to the company: State Farm 400% less than the competitor.

It's an important example that teaches a powerful lesson. Done right, reducing Moments of Truth will increase customer satisfication while dramatically reducing the cost to the company. Think about it. What else can you do that dramatically improves the customer experience WHILE reducing the cost of deliver to the organization?

Virgin Mobile entered the US market with a bang, by offering a newly defined cellular service value proposition - pay as you go (and more).

Certainly the number one customer expectation that Virgin identified as a competitive differentiator was the elimination of the onerous “cellular service contract.” The service contract is a characteristic of the existing cellular service market loosely disguised as a “customer benefit.” This “benefit” is created by making non-contract service unattractive from a pricing standpoint. Why does the service contract exist in this form? It exists as a mechanism for cellular service providers to “push” a product of predetermined customer lifecycle duration because the industry as a whole has been unable to establish profitable customer lifecycle duration due to consistent failure on customer expectations.

The practice (and product) exists as a mechanism to ensure some profit to the cellular service provider. Virgin saw this as an opportunity to define a new customer value proposition that would place it at a competitive advantage for a meaningful portion of the cellular service market. Virgin introduced a new service, pay as you go that requires no service contract. You simply pay as you go.

If you documented the “process” you go through as a customer in “buying” cellular service in the traditional form you would find it fraught with Moments of Truth. It was not that long ago that most people experienced a “process” that took in excess of 30 minutes to complete just to get a cell phone and service.

With Virgin Mobile USA’s approach it can literally take 5 minutes or less. Buy a phone, any phone you want, and go. Charge it any number of ways. No contracts, no credit history, no credit cards, very few Moments of Truth.

The results of the strategy are compelling with Virgin Mobile USA touting an averaged growth rate of 1 million new customers per year.

Looking at the market from the customer point of view, in the 1960’s Discount Tire decided to run its business by creating a definition for success (customer success) that fulfilled an unmet need in the market. This led to Discount Tire running its business with low prices without up-sell, the employment of staff trained to give objective advice on tire selection appropriate to the needs and goals of each customer and prompt, courteous delivery of services. Those Moments of Truth in the typical up-sell and cross-sell “process” were suddenly gone.

How do you get to $1.5 billion in revenue in a crowded, low-margin business like retail tires as a start-up? Not by adding in extra services. That is another big difference with Discount Tire. The company became an organization of tire experts. It only does tires and tire related services. You can’t get your oil changed at Discount Tire because oil changes are not related to tires.

Another interesting move by Discount Tire was the decision to deliver flat tire repair to customers for free. Again, focusing on the customer and customer success, Discount Tire decided to give away a high-value (to the business) industry service - the repairing of customers’ flat tires - for free. Now having a flat tire is certainly a Moment of Truth for customers, but having those flats fixed for FREE is a Moment of Magic – eliminating the additional Moments of Truth we would normally encounter in attempting to get our flat tire fixed.

Discount Tire is the company that fixes its customers’ flat tires for free, doesn’t up-sell, offers very low prices on a broad selection of tires, has objective tire experts for employees, and gets you in and out fast.

That value proposition and delivery of success has turned the tire sales and service industry upside-down.

People are motivated by their personal drive and character or by the context that surrounds them. While an economic “downturn” is unneeded motivation some, for others it’s these bumps in the road that get us up and out of our chairs moving, thinking and acting differently. In many ways a challenging business market is the business leader’s Moment of Truth.

But Moments of Truth with our customers are what really matters and innovating around Moments of Truth in customer interactions represents the greatest opportunity to improve business success, create customer loyalty and expand market share.

What are Moments of Truth? Moments of Truth are any – and every – interaction with the customer. First articulated by Richard Normann (considered by many to be one of the most profound and sophisticated management thinkers of our time) in the mid 1970’s, Moments of Truth are the heart and soul of the experience customers have with the businesses they patronize. They are also the singular most influential source of customer dissatisfaction. As a general rule that applies to virtually any industry, excess Moments of Truth are the number one limitation to businesses achieving their full potential.

You may recall the SAS turnaround led by Jan Carlzon back in the early 1980’s. This is the most popularized use of Richard Normann’s customer value chain insights using Moments of Truth to challenge the way the business interacts with its customers. Where Normann theorized, Carlzon implemented and the astounding turnaround results led to Carlzon’s publication of the book Moments of Truth.

The basic principle goes like this. When customers engage with a business for any reason they end up participating in a “process.” That process, as the customer experiences it (from their point of view), is the customer relationship. From the customer’s point of view there is nothing else.

Each and every customer interaction in all of these “customer processes” will leave an impression on our customers and every single interaction is a potential point of failure. Customer dissatisfaction comes from two places, interactions the customer deems unnecessary and interactions the customer deems inappropriate or unsuccessful.

In all of these interactions the customer is judge, jury and when needed, executioner. The business is not an equal partner in this relationship. The customer has all of the power simply because the customer can take their business elsewhere anytime they choose to do so.

Sounds like our customers aren’t very reasonable and that we are at their whim or fancy however that may take them doesn’t it? That’s not how it works though. Customers are generally reasonable and they also act on comparisons. In its simplest form providing an experience that is better than our competitors is usually enough to tip the scales in favor of increased business success. Yet understanding the concept of Moments of Truth and the customer experiences we create can be very empowering to business leaders as a way to create significant differentiation.

For example, if we asked the question “How might we innovate to increase the value of what we offer to our customers?” what might come of that? There are a number of companies that have done just that. Here are several examples... (next blogs...)

You’ve probably heard the term “Moments of Truth.” You may even use the concept in your own process work. You may even attribute the concept to someone in recent times. But the term Moments of Truth was first articulated as part of a management philosophy by a man named Richard Normann.

Though not nearly as well known as other management thought leaders, Richard Normann holds a special place in the hearts of those who do know about him. Considered by many to be one of the most visionary business luminaries of our time, Richard Normann developed the foundation of customer-centric value chain thinking with Moments of Truth as the central idea around which his insights were built.

It was Richard Normann that inspired Jan Carlzon. It was Richard Normann who brought to our attention the fact that the experiences we provide to our customers are primarily formed by these Moments of Truth, and that by owning and managing them we can transform the customer relationship into something that delights our customers, astounds our competitors and enthuses our employees.

At the International Process and Performance Institute this concept of Moments of Truth is used extensively to understand and improve process. The most interesting aspect of this is that when we do focus on Moments of Truth in a process in order to improve the customer experience the processes that result from this almost always end up with lower operating cost and greater employee satisfaction. They are better processes on multiple fronts.

Of course, it is up to us to act on the customer experience, to look at Moments of Truth so that we can understand what kind of experience we are really delivering to our customers and how those Moments of Truth may be affecting them.

In the next series of blog articles I will be looking at the importance of the “processes” that are created by every organization as experienced by that organization’s customers.

These “customer processes” are rarely documented, designed, managed or controlled as “end-to-end” processes even though they represent our entire relationship with our customers. Lead by the insights of Richard Normann, there has evolved a way to “look” at these processes, design them, manage them, control them and innovate on them to dramatically increase perceived customer value and to move the organization “up” into a higher level customer value chain.

At the heart of every customer experience are Moments of Truth. Richard Normann first articulated them; Jan Carlzon turned SAS around with them and subsequently wrote the book “Moments of Truth.” Innovation on Moments of Truth is fertile ground for building customer loyalty, expanding market share, and remaking entire market places.

Sir Richard Branson of Virgin uses this type of innovation on a regular basis. The largest Tire Retailer in the US built their $1.5 billion business using it. State Farm lives and breathes it every day. What’s stopping us from doing the same? Nothing but ourselves...

The innovation I am talking about is how some businesses are able to look at the experience the customer has when interacting with the business and challenge it. They challenge the shape of that interaction at a fundamental level, seeking a way to make the interaction simpler, easier and more successful in the eyes of their customers. They do it by challenging the Moments of Truth in the process and eliminating as many as they possibly can.

Time for an edgy article, one that challenges the status quo and upsets some apple carts...

BPM.  Business Process Management is a tool - but it is NOT A TOOL. For everyone, and I do mean EVERYONE, that thinks BPM is some form of technology or use of technology you have missed the boat, the big picture and the real opportunity. People who believe that BPM is the expression of process in technology are limiting their perspective to a very tactical aspect of BPM that is not transformational and that is often destructive. Those who are "implementing" BPM with software modeling tools, workflow execution software, BPMN, BPEL, or whatever haven't missed the boat, they have missed the ocean.

But that goes against an awful lot of leadership commentary and work in practice so what is the disconnect? It starts with an understanding of what BPM is - which is certainly a challenge because there is no common definition of BPM. Instead there are many opinions and pespectives. Let's try and remedy that with what may very well be the best definition of BPM to date:

BPM Defined

BPM is an understanding of the work that people do in an organization as related activities (or tasks) that often encapsulate or create experiences (customers or internal customers), that exist to achieve a result, that are optimized and managed against desired experiences, that are refined to eliminate non-value added work, and that are supported by technology in a way that makes all experiences (customers, internal customers, participants, managers,etc.) simpler, easier and more successful.

So BPM is a tool, because it is something we can use to accomplish many organizational benefits of great value. We can increase customer satisfication, improve customer value, reduce costs, improve employee morale, make less mistakes, create more consistency and get more work done.

BPM is not a tool because too often the term "tool" refers to technology, and as we can clearly see from the definition above technology is a suporting aspect of BPM but it is not BPM.

From the definition supplied we can also see that BPMN is not BPM. I pick on BPMN because of its hype as a "standard" when under no circumstances has it ever been "standard." BPMN is a complicated technical expression that has attempted to codify a bunch of analytical concepts from several decades ago along with process structure that partially aligns to workflow technology.

Of course, that aligns to all those people who have been coming out of the woodwork lately with "decades" of BPM experience when the term was only coined in the early 1990s. Huh? Reminds me of the guy who claimed that BPM is really just a part of the philosophy that lead to mass production and assembly lines...

What about Richard Norman? Have you heard that name before? He was the guy who coined the term "Moments of Truth" and produced major works in the understanding and leveraging of processes behind customer experiences and customer value. Moments of Truth aren't in any of these other things I have mentioned... well, that's not true. The concept of Moments of Truth isn't in any of these things but Moments of Truth are THERE IN SPADES.

The Magic of BPM

The magic of BPM is the opportunity to address human experience in process. Yes, that means dealing with subjective, emotional, unpredictable and often inconsistent behavior but that's what it means to be human. How can we possibly discount this if we are truly logical, rational and intelligent? Water and oil don't mix, and these concept refute each other. We cannot be logical, rational and intelligent if we ignore the human aspect of process. In fact, the human aspect of process - and of BPM - is the single most important perspective hands down in BPM. If you only get one piece of it, this is the piece you need to "get."

So BPM is in a mess but if you can wade through that mess and understand what BPM is really all about you can achieve great things. You can certainly use technology to aid you, and you may find that technology will empower you. But BPM - once and again - just isn't technology folks. It isn't BPMN, it isn't something you can buy in a box, it isn't mathematical and it refutes all attempts to create a singular executable expression form of it. It's essence rests in human nature, and anyone that suggests they understand and can codify that has failed to reach the state of wisdom.

While I may be bold enough to present a definition of BPM I am not fool enough to suggest that I understand all aspects of BPM. Instead, while I make observations that capture many important aspects of BPM I wisely understand that what I don't know easily outweighs what I do know.

The mess comes from believing that we we know, what we care about, or what we want to be true is a comprehensive - no, a complete and holistic - understanding of BPM. We aren't close to that, but some of us are farther away from the truth than others...

I had an interesting observation the other day that made me think again about how processes often really work and how people in process can make all the difference in the world...

The observation was a case where one person in a process - just one person - had a tremendously powerful impact on a core business process. This person, quite meticulous and very quality-oriented, was performing a role in the process that was never designed into that processs nor was there a real understanding in the organization that this person was having a specific impact. Well, that's not completely true. What the organization did understand was that when this person was there (they only worked at this company 3 days a week) things just naturally "worked better."

So what role was this person performing?

The self-assigned role was that of the CORRECTOR. What this person did was CORRECT anything that was not done right on every piece of work they touched. When I gave this situation a closer examination, what I found was that the work in the process (actually several processes) in this organization naturally accumulated a number of (usually small) human errors as work was performed. The CORRECTOR, on their own, was effectively cleansing all work of these errors that they touched.

Let's think about this. If it is common, and I think it is, that work in a process will often accumulate human error as it is transacted then those errors will require additional work at some point. Some of those errors may spawn numerous additional work activities - including impacts directly on the customer. For example, a single typo on an address can cause mail correspondence to fail to reach the customer. Suddenly that single typo spawns another process which can be as onerous as cancellation of an account for non-payment because the customer never got the bill followed by phone calls, research, corrections, reinstatement and, of course, deep customer dissatisfaction.

So I then began to wonder, how many correctors are out there "fixing" our processes? How much does the quality of our processes and the customer experience we deliver depend on a single person or a small number of people that, on their own, scour work for accumulated human error and reinstate quality into our processes? How often does this happen and we don't even realize the important role these people play?

Part of the challenge here is the focus or emphasis we give to those who work in our processes. Focusing on outcomes - and imparting outcome ownership - to people actually doing the work in a process is a critical element in delivering on that outcome. Processes designed or acted upon as if they are assembly-lines are highly likely to produce accumulated human error. Assembly line processes may work well for phsyical assembly of products, but they are highly ineffective for subjective business processes. For these, outcome ownership is the key.

But I also wonder if correctors may need to exist in our processes. People have different personalities and behaviours and I think this is a skill that is simply ingrained in some people. In that case we should probably spend more time understanding the strengths and weaknesses of the people in our processes to help us understand and work towards a balance of abilities to produce the result we desire.

Of course, you won't find this discussion in the questions and comments on most all of the "BPM discussions" like linkedin (for example). I periodically answer questions there and attempt to inject some new thought into the old - and almost frighteningly narrow - perspectives given there. What I primarily see in the BPM discussion at large is a consistent - zero value - postulation of narrow perspectives that primarily seek to validate "what I do." The opportunity is to challenge the status quo and learn from our observations so that we can understand process better and use that understanding to improve the work we do and the results we produce.

Yet how many of us have actually observed things like CORRECTORS? How many of us understand the real importance that specific people, people types (personalities) and focus (outcomes) really have on our processes? I suspect (strongly) that none of us pay as close attention to these things as we should.

Meanwhile, the CORRECTORS keep doing their thing, instilling quality into our processes and often making the difference between business success and business failure. The sad thing is, we usually don't notice their contribution until they are gone...