Part 3: Prevention- by Gabe Smith
So how can you prevent the Truck and the tree?
As with most issues in the corporate world, there are 3 factors involved: People, Processes and Systems. They all work together to enable resolve problems. Let’s discuss both the Truck and the Tree in light of people, processes and systems.
How do we fix or mitigate the “Truck Factor?”
• People: Redundancy does not sound good when it comes to people, and of course there are going to be specialists that have knowledge in the organization that no one else does. We all know those “go to” people in the organization that seem to know everything and are, thus, indispensable. I am not proposing to change this but I am proposing that, when it comes to critical business processes, there be some redundancy. These are the processes that can stop business if they are not working and it is crucial to have the ability to run these processes if someone is sick, wins the lottery, or leaves the company.
• Process: So how do you create redundancy in critical processes without creating redundancy in people? There are a few ways to accomplish this. One is through documentation and good mentoring on critical business processes. Another is by putting these processes into a system and automating as much of it as possible., This brings me to the next points.
• Systems: You probably guessed that I am a pricing software guy, so I will focus on the systems aspect. I tried to hold it to the end and, as I mentioned above, the system is an enabler for people and processes. By itself, the system will not solve all problems. However, in conjunction with the right people that know the processes they want to enable going forward, a properly implemented and integrated system will enable step-function improvements in many processes that simply cannot be achieved without it. We have seen a 2-4% return on sales on numerous occasions in our industry, which has also been proven on hundreds of case studies by Deloitte, Gartner and AMR.
Now let’s turn to “The Tree”
• People: The people need to be listening and this needs to be an organizational priority. In SaaS and other subscription companies, this is the role of “Customer Success”, to listen to what is going on and to pre-empt issues that may arise. Companies like Price f(x) use tools to monitor customer health metrics.
• Process: The processes have to be in place to measure these factors and act on them if something is detected that requires action. Measuring is the first step, but you also need to empower the people that are doing the measuring to take action, as they see fit, without a lot of bureaucracy stopping them from doing so. This is the essence of being customer centric: listening to what your customers are saying, but also trying to sense what they are thinking by analyzing their actions. Are they ordering more from you or less? Are they buying more categories or less? What is your wallet-share and how is that changing over time?
• Systems: As you can imagine, the answers to the questions above and others are vastly easier to determine with software. For SaaS companies, we have the luxury of being able to see the usage of our solution in real time, which we use as a key indicator of customer health along with several others. But in a more traditional business, you have to look at purchasing behavior, customer service calls, timeliness of payments and Net Promoter score. There is contention on the effectiveness of that metric, but that is for another post.
I hope you enjoyed this 3-part post, please like and share. If there are other topics you would like to see me post going forward, please let me know.
Source: Gabriel Smith, VP Solution Strategy and Innovation at Price f(x)