We are not going through a technology disruption we are going through a process revolution! Technology is an enablement tool to be able to enhance your processes to deliver whole value to your customer.
Technology’s transformative effects on the business landscape has been a hot topic, however the real transformation is the simplified process of delivering goods and services that has been enabled by technology.
Photo from: DR on Flickr
All the “upstarts” – Amazon, Uber and AirBnB did not create a new service – they identified a new service delivery process.
Disrupting by providing billion dollar processes improvements
These tech giants emerged as a result of their ability to create a straight line to the customer, delivering exactly what the customer is looking for – nothing more, nothing less. They took a critical look at the value loss in the service delivery model of the industries of Retail Sales, Taxis, and Hotels and provided “pure value” to the end consumer by leveraging technology. Their platforms delivered key values of saving customers time and money with their easy-to-use and reliable ordering platforms.
Creating huge profit gains through process improvements
Process innovation is really the last frontier when it comes to winning the competitive race in any industry. In order to truly innovate on a process, one must take a critical look at the end to end value delivery process to the final customer to discover where customer value can be optimized.
Cutting your operating costs while also increasing customer value
Let’s look at how this was put into practice by Amazon. When customers enter a retail store they are not willing to pay for the privilege to browse the store, touch the product and interact with store clerks. However, to operate a retail location companies must staff the store, provide capital to keep product on the shelf and pay for the physical location itself. Why finance all of these operating activities when they don’t provide value to your end user?
It is in these processes where the costs of the service provider far exceed the value that the customer is deriving where the biggest opportunities for process disruption can be discovered. So, how can your organization join the process revolution before you are out seated by the upstarts?
The Recipe for Process Disruption in 6 Steps:
Identify the real value that your customer is willing to PAY for
Even more than customers “want” or “need” this value, they must be willing to spend hard-earned cash for it. Customer value is defined as the willingness to pay for the attributes of your product or service.
Identify your delivery process to deliver that value.
These are the steps in the process that are necessary for the customer to receive the value that your company is providing.
Map the entire process.
Be sure to map it from the very first step until it finally reaches the customer. Don’t forget to include interdepartmental hand offs, communications required, approval processes, procurement etc.
Distinguishing the real value adding processes.
With the visual map complete identify which steps in the process add value to your customer – be critical! Ask yourself “if my customer was sitting beside me would they actually part with a dollar for someone to do this activity?”
Circle these steps.
Identify how to connect these steps
in as few additional steps as possible.
If you have done this correctly you will have found less than five percent (<5%) of the process steps that you currently operate actually provide value to your end customer. If you derive this back to what comes out of your own wallet this means that you are paying 95% too much for all goods and services that you currently consume. Are you surprised?!
The concept of pure customer value is merely a theoretical concept but one that can be used again and again to identify opportunities within your process to save costs by eliminating redundancies and increase revenue by offering greater customer value. The trick is that this exercise can be completed again and again to continually identify waste in the process. Even those former upstarts still have 95% waste in their process. Iteration is the key to optimization.
Today, businesses globally are moving faster than ever and organizations that don’t adopt this critical perspective will not be competitive in the new landscape where new businesses can be launched on just a laptop within a matter of hours. What are the business areas that you see that are ripe for process disruption?
Let us know what your thoughts are on Process Disruption in the comments below.
Questions? Contact Us
If you want to learn how to instill this continuous improvement culture within your organization contact us at Propel Solutions today. We specialize in process optimization and have a proven track record of powerful results.
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