Delivering Customer Aligned Service Excellence

Killing Bureaucracy in the Corporate – Top Tips

Thought Leadership PresentationPrepared by

Charles BennettJuly 2014

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Inter-relationship between Bureaucracy, Cost Base, Customer Experience and Profitability

Traditional Situation

Leaning Process

End

Profitability is directly relatedTo customer experience but there is a change lag

Bureaucracy ( complexity and the impact of over control) directly impacts; cost base, service levels and customer experienceRevenue is directly proportional to customer experience but there is a time lag in impactCorporate Profitability is impacted by customer experience and complexity of process but most companies do not sufficiently consider this

BUREAUCRACY

COST

PROFIT

CUSTOMER EXPERIENCE

(Aligning organisation to Successful Customer Outcomes, and removing waste from customer’s perspective simultaneously)

Traditional reductionist approachesreduces cost but they may not reduce Bureaucracy (approvals, check points, Decisions) and often customer experience

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Bureaucracy in context

Bureaucracy is all about process. Bureaucracy directly impacts cost base and directly impacts customer experience. Customer experience is proportional to revenue but revenue impact always lags customer experience in the context of the large corporate this would be 2 to 4 months.

Reduction of bureaucracy needs both a tactical and strategic focus but the “quick wins” can be achieve relatively quickly. The tactical approach is best achieved via remediation of some of the more complex processes otherwise it becomes an opinion based exercise where it takes a long time to gain agreement.

Everybody is going to have strong opinions as to what the best approach is going to be. By turning the identification of bureaucracy identification opportunities into a process with some method behind it, you can build momentum quite quickly and remove the opinion based ideas that most people lead with. This is a function of process remediation and can be started quite quickly.

Understanding Bureaucracy (1)

Facts

• Bureaucratic organizational structures have numerous layers of management, cascading down from senior executives to regional managers to departmental managers, all the way down to shift supervisors who work alongside frontline employees. Due to the many layers of management, decision-making authority has to pass through a larger number of layers than with flatter organizations. Refund decisions, for example, may have to pass from frontline employees, through shift supervisors, to store managers for a retail outlet in a bureaucratic company.

Significance

• In a bureaucratic organizational structure, authority is generally centred at the top, and information generally flows from the top down. This usually encourages a company culture focused on rules and standards, where operational processes are rigidly controlled with best-practices methodologies and close supervision.

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Understanding Bureaucracy (2)Advantages

• Top-level managers in bureaucratic organizational structures exercise a great deal of control over organizational strategy decisions, which is ideal for business owners with a command and control style. Strategic decision-making time can be shorter in a tall organizational structure, since less individuals are involved in the process. Standardization and best-practices are often highlights in companies with tall organizational structures, ensuring that work is consistently completed efficiently and effectively. Larger organisations benefit less from this than the newer smaller outfit

Disadvantages

• Bureaucratic structures can discourage creativity and innovation throughout the organization. No matter how ingenious a business owner is, it is virtually impossible for a single individual to generate the range of strategic ideas possible in a large, interdisciplinary group. Front-line employees may receive less satisfaction from their jobs in a rigidly bureaucratic organization, increasing employee turnover rates. Organizations bound by rigid controls can also find themselves less able to adapt to changing conditions in the marketplace, industry or legal environment.

• Financially bureaucratic organisations usually carry extra cost base created by the extra processes based around the decision points, checks and controls

• Agility to change is impacted as companies cannot often quickly react to challenge or opportunity due to the reliance on “heavy” checks and controls procedures

• As mentioned earlier Customer Experience is often negatively impacted. The focus on the checks and controls takes away focus on customer and this has a delayed revenue impact which is often overlookedPage 5

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Verdict

Considerations• At first glance, bureaucratic organizational structures may seem less

desirable than flatter structures, but this is not always the case. Some industries, such as IT organisations, may benefit from a more autonomous structure, but others such as fast food benefit from tighter controls and taller hierarchies.

• Every organisation needs a level of bureaucracy otherwise it is exposed to all sorts of risks. Companies who are looking at reducing bureaucracy are usually already feeling the impact of complexity of process and onerous controls.

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Tactical vs Strategic ApproachesRemoving bureaucracy in a bureaucratic organisation is often challenging as there will always be stakeholders defending the need for those aspects that belong to them. Tactical and Strategic focus often helps here.

1. Use a tactical deployment to reduce the most immediate issues. It is important to include stakeholders so change is inclusive rather than imposed (fosters resistance)

2. An inclusive approach needs to:• Be non-opinion based i.e. there needs to be a methodology• The methodology needs to be simple enough for the stakeholders to be able to understand and at least contribute

to it. Traditional “Best Practice” such as generic Lean Six Sigma is too complex. A tailored “Lean Six Sigma for Service” which includes new and more agile tools works better.

3. Strategic implications include functional, organisation and performance measure consideration. In the longer term e.g. 3 years if these are not considered then the controls, complexity and cost will creep back

1. Make the tactical approach a process initiative

The approach needs to be non-opinion based as far as possible as well as simple to apply, understandable and agile. Using a process initiative means the “decision points” both explicit and implicit are identified. Decision points impacts: • The shape of a process (or activity stream)• The complexity of process• The experience of stakeholders and customers in the process

2 Top tips to remove bureaucracy…….

2. Focus on the outcome not the problem

Outcome based methods ensure the risk areas identified are considered within the remediated process. The outcome framework at high level consists of:

• Ensuring the operational risk outcomes are understood and delivered against• Points of Failure and non-contributory Causes of Work are identified and removed• Successful Customer Outcome for the process or work stream is enhanced• Targets for change agility are quantified and delivered against

The removal of tactical bureaucracy issues are addressed but outcomes around risk, customer and performance are simultaneously addressed

2 Top tips to remove bureaucracy…….

Training:

• Lean Six Sigma for service

• Advanced BPM methods

• Customer Expectation Management

Thought Leadership Research Centre into next practice

approaches Developing new advanced BPM,

customer centricity & innovation methods

White papers, articles and blogs Conferences, seminars and webinars

Training and Thought Leadership

Driving operational excellence and continuos improvement initiatives

Developing customer strategies and driving through to operational and process change

Customer experience management BPM and Lean Six Sigma deployments Project and programme management

Business and Operational Services

Managed Services Integrated functions Integrated managed functions Outsourcing

Kaizen Services Kaizen evaluation & grading system Kaizen office

Efficiency Services Efficiency base scorecard IT efficiency office Rapid efficiency assessment

IT Services

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Creating Service ExcellenceNetforte helping you create a Service Excellence Partnership, delivering customer outcomes that consistently satisfy or exceed expectations.

A Service Delivery Framework that is transparent, repeatable, easy to follow and resource independent.

This focus will help you solve the3 biggest challenges facing organisations today:

• Customer Satisfaction

• Stakeholder/Employee Engagement & Commitment

• The consistent delivery of exceptional results

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