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The Plural of Anecdote is Not Data

The most common corporate buzzwords that I’ve been hearing over the last year are “transformation and “disrupt”.  Companies are focusing on how to create a competitive advantage in this tough economic downturn.  Markets have been shrinking during this 22 month recession and any advantage must come from focusing on business infrastructure in the reduction of capital expenses and improving customer experience with both products, sales, and after sales to reduce operational expenses.  Companies are now focusing on projects that will improve product experience, field performance, sales cycle, support experience, and other customer contact points that can drive customer loyalty.  However, most projects that I’ve heard described as “transformational” often have poorly defined goals, goals based upon some pretty wild assumptions or short term problems with limited return.  Transformation should be more about how we approach our business issues.  Most business problems are not unique or new and we need to find new ways to approach them.

The key to real business transformation is to understand the problem thoroughly and to define goals crisply.  There are many business problem-solving methodologies that guide organizations through this transformational way of thinking but they’ve gotten a bad reputation.  There is Total Quality Management (TQM), 6 Sigma, Lean, and Theory of Constraints (ToC), to name a few.   Oh, I know that your first thought about these methodologies are of those “crusty old school” manufacturing types that harps on process as if it were a religion.  Unfortunately, people misunderstand the purposes of process and take them to an extreme or they lose sight of the reason for building the processes and the project becomes a goal unto itself.  If you can find solid business people, these methodologies can be a tremendous help in defining real value, using data and measurements that mean something to the business, and creating predictable outcomes with measurable results.  It doesn’t matter with methodology you use.  Just pick one.  What are important are the leaders you get to apply them appropriately.

Many projects set out to solve problems but miss the mark because they jump straight to solutions based upon assumptions.  A problem solving methodology forces you to understand those assumptions and validate them with data.  Several months ago I talked to a product management executive that wanted to reduce the cost of field failures.  Field replacements were costing him millions of dollars a quarter and he had seen a report that showed more than 50% of the units returned had no problem found.  His team decided to solve this problem by creating troubleshooting training for the technical support group so they would be able to better isolate problems and solve them without replacing the devices (at great cost).  2 months after the training was delivered there was no change in the field replacement rates and the same percentages came back without any identifiable problem.  This was a great example.  The team thought they new what the problem was but spent time and money without identifying the real cause.  Their transformation occurred when they realized that they created a solution without understanding what the real problem was.  After close analysis of the technical support trouble tickets and interviews with the support personnel, the team discovered that the product didn’t have enough diagnostics in it to isolate problems and replacement was the easiest solution.  For less than it cost for 1 months worth of replacement product they developed diagnostics features that reduced field replacement by 30%.

Jack Welch Recognized the transformational nature of solving problems by using data and a disciplined methodology.  Under his leadership, GE taught all of their business leaders 6 Sigma so that they would have a common toolkit to approach problems with and create the greatest likelihood of success.  Mr. Welch said that growth was a process and it allowed him to grow GE from a $13 billion company to one worth several hundred billion dollars over a 20-year period.  6 Sigma brought clarity to their business and a common vocabulary to work from.  The transformational aspect of this approach is that it provides a roadmap to achieve predefined results in the fastest possible way.  It’s transforming how you think Now, that is a “transformational” concept that should “disrupt” your business in a great way!

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