A Preoccupation With Internal Perspectives

As a management consultant, one of the strongest admonitions I can offer to my clients is to build a corporate sense of urgency towards results, and, moreover, to evidence that sense of urgency with a commitment – with a plan – to implement a focused process of continuous improvementa prioritized series of initiatives, performed in a specific, consecutive order, that achieves targeted, defined, measurable results.

EFA - BSC Internal Perspective

But – what kind of targeted, defined, measurable results should we be talking about?  A process of continuous improvement . . . focused on what?

The idea of continuous improvement implies a need to address issues, to solve problems;  if it was not a manifest weakness, or a threat, or a constraint, or a gap, or an inadequacy, or a problem, there would be no reason or need to improve it.

The nature of every accepted continuous improvement methodology – whether it is Total Quality Management, Business Process Improvement, Lean Production, Six Sigma, or Theory of Constraints – is to focus internally, on resolving operational issues, on solving problems, on dealing with quality issues;  done the right way, continuous improvement addresses the root causes of problems, not the symptoms;  done more comprehensively, it establishes the operational drivers of business outcomes.

Here is the potential problem:  operational planning has to exist within the larger, more important context of strategic planning that establishes prerequisites and necessary conditions.  If that context does not exist, or if the existing context has not been updated – is no longer current, is no longer relevant – then there is no direction.

During one of the general sessions at this year’s Housing Leadership Summit, John McManus (Editorial and Content Director, Residential Group, Hanley Wood Media) repeated a question he knows that I like to ask at Pipeline workshops™, no doubt expecting me to answer it (which, of course, I didn’t):  “What is the difference between speed and velocity?”

The answer is:  “Velocity is a vector measure;  it is speed in a specific direction;  It is speed with a purpose.”  In the purposeful, intentional world – whether that purpose and those intentions involve climbing mountains, or racing yachts, or running homebuilding operations – velocity requires that you know where you are going . . . before you go.

Otherwise, you get one or more of the following occurrences:  (1) things can get improved that have no correlation with where your enterprise needs to go, with what it wants to be;  (2) it becomes reasonable to improve anything and everything you want, without regard to order, priority, or timing;  (3) what gets improved can be disconnected from – can have little to do with – the value homebuyers expect to receive from you.

The issue speaks to the front-end of the fundamental proposition of business:  the reason an enterprise exists is to make money;  the way an enterprise makes money is by delivering value to its customers and other stakeholders;  that value is delivered through the work that the enterprise performs.  The proposition goes on to say that work involves workflow, usually performed in processes, projects, or cases;  the proposition doesn’t delineate between value created in products or services.

But, somewhere between value and workflow, the business proposition moves from an external perspective to an internal perspective.  It moves from being an externally-focused value proposition, to being an internally-focused value discipline.

Your buyers don’t care about whether you achieve operational excellence, or product excellence, or (what Treacy and Wiersema would characterize as) customer intimacy;  they care about the value they pay you to create and deliver for them.  If that value does not comport with their value proposition, if your value discipline does not make you stand-out, if it is not distinctive, if it does not separate you from the herd, if it does not extract you from the tar pits of averageness, if it does not meet their specific requirements – their definition of it – they will find it elsewhere, from one of your competitors.

Yes – a Balanced Scorecard will tell you that operating performance drives business outcomes, that operational drivers are an internal means to a desired external end.  But, you are not in business to be operationally proficient;  you are in business to make money, by delivering exceptional levels of value to buyers.  And – when there is a preoccupation with that internal perspective, you cannot achieve that goal.

Q&A:  Who is the beneficiary of the value you create?  Your buyers are.  Who is the beneficiary of any of the three excellences (operational, product, customer) I noted?  You are, but only to the extent that excellence enables you to create that value.  The only reason you strive for operational excellence, product excellence, or customer intimacy is because they are part of what enables you to deliver more of the specific, distinctive value your buyers demand – whatever it is.

If you can’t make that connection, the internal value disciplines – operational excellence, product excellence, customer intimacy – don’t work;  you may have speed, but you won’t achieve velocity.  Pardon the stranded preposition, but before it is worth being good at something, you have to know what it is important to be good at.  The question becomes, what do you have to do to get there?

Eli Goldratt has it right:  What to change?  What to change to?  How to make the change?

When you know what to do, you can figure out how to do it.

And, then, it will make all the difference.