Stifling corporates

A few weeks ago, the managing director and I had a meeting with the South African innovation manager of a major international food manufacturer based in north America.

My managing director has a gift of being able to identify quickly the essential issues that a prospective customer has, and this often enables us to have meaningful conversations early on in a discussion. In this instance we were getting along very well and discussing some really interesting challenges and possible solutions, when the IT manager was invited into the meeting. Within minutes his attitude towards any kind of solution killed the atmosphere.

He pointed out how every subsidiary had to comply with the rules laid down for IT projects by head office. Listening to the bureaucratic process that they had to follow, I was struck by how a good intention - preventing project and software proliferation – had served to obstruct a manager from making his department more productive, and effectively stifled any type of creativity or process innovation.

It also made me appreciate how fortunate we are as a company to deal with owner/manager companies in the medium-size business market. We had meetings this week with MDs and FDs (managing and financial directors) of building and construction organisations. In the space of a single meeting with some of them, we went from an initial discovery session to the directors making decisions about preliminary work we could deliver. They were able to identify the problems, debate and evaluate options, and decide on a course of action to introduce new or improved processes without having to go through a laborious approval process.

Vinnie has coined the term “business process angioplasty”, which is his way of showing how processes should be improved. The food company needs to do some business process angioplasty on its IT adoption process.

Marketing becoming more formal

The MarketingSherpa website has published ‘5 Steps to Better Marketing Operations‘ (restricted access). It discusses the rise of Marketing Operations (MO), a field which is trying to formalise and quantify marketing, and something that I was introduced to at JD Edwards in the early 2000s. MO arose as a response to the executive view that marketing was not measurable and therefore not manageable.

The steps are:

#1. Establish a formal MO function

This means that MO is not a one-person job, and should have its own budget. It also mentions not making “the mistake of expecting immediate ROI … research shows that investments in an MO function should be viewed as a long-term investment and requires a three- to seven-year payback.”

#2. Broaden the MO scope

In order to be effective, broaden the scope of MO to cover not only the marketing department’s activities, but also interactions with the entire company.

Best practice firms included the following nine areas in their MO efforts:
o Measurement
o Planning
o Process improvement
o Marketing IT
o Budget and finance
o Marketing intelligence, including research and analysis
o Socialization and communications within the organization to get buy-in for MO activities
o Stakeholder alignment
o Sales alignment

In addition, best practice companies also included dashboards and scorecards in their MO functions.

#3. Align MO goals with the biggest marketing challenges

These are:

o Measuring marketing ROI and demonstrating value
o Balancing marketing strategy and tactics
o Creating common goals for marketing success tied with other groups

Some companies using MO mentioned that they “practice marketing accountability (setting specific commitments, tracking and adjusting performance)” to measure and demonstrate ROI. Others said they use MO “to balance big-picture, strategic planning with day-to-day marketing execution decisions.” MO was also used to make better use of “other groups in the company who have a stake in marketing decisions.”

#4. Get buy-in from senior management and outside departments

Examples include:

o Integration with the sales organization to tie sales objectives with MO goals
o MO personnel having an early role with business units for product development ideas

#5. Conduct regular reviews to improve MO functions

Typical topics covered in these reviews are:
o Annual or quarterly marketing planning
o Budgeting and resource allocation
o Creative issues and brainstorming
o Education and team development
o Marketing portfolio investment evaluation
o Operations optimization

 

If you have never experienced MO, reading the above sounds like more marketing speak. It is definitely for larger organisations and you usually have to go through the stages of marketing accountability. At JDE, it required quite a culture in marketing to get us started, but that was the post-Y2K and -9/11 era, and marketers realised it was needed to help us survive in our jobs.

Many companies are going to find getting MO systems difficult, in the same way that HR managers struggle to justify investment in HR systems. Also, marketers are traditionally not a measurement-bound group of people, unlike sales, and therefore are likely to resist. Furthermore, few marketing managers will have a clear idea what measures to employ.

I’m not sure how many recent marketing-oriented graduates from SA universities have had the exposure to this new type of system, and whether it is generally taught at universities yet.

Is ‘best practice’ culturally-inclined?

Back in the pre-Y2K era, when I first encountered ERP, one of the selling points that the ERP vendors used to tout was their ‘industry best practice’ solutions. This meant that they had determined that for a particular industry (say buggy whip production) that best way to do things was to follow a set of processes that their software encapsulated.

I don’t know how many companies were convinced but that message, but its fallacy was brought home to me recently when we visited a company in the heavy manufacturing industry. Not that best practices are wrong per se, but its likely that they were developed in first-world environments, and transferring them to developing-world situations is not straightforward.

During our walk around the factory, we were told at more than one location that the factory managers had tried implementing procedures that were considered first-world best practices but had failed on every attempt. In some cases the reason was lack of advanced support infra-structure on the shop floor, but in other cases it was due to the level of education and training of the workers, cultural attitudes, and language issues.

So when we implement at the factory, we have to be aware of the local ’way of life’ and not try and impose practices just because some ‘northerners’ think they should work. Once again, it shows to me the importance of enterprise software vendors recognising local conditions when they sell their solutions. I’m afraid that too many international (US?) vendors have little idea about how things work outside the environment they are familiar with, and then cannot understand why some countries struggle with implementations.

Six Sigma on the wane

An article in Business Week suggests that the six sigma quality improvement practice is on the wane. It’s another of those management fads that seemed to take hold of the US especially with a degree of fanaticism, but now reality has begun to set in. After you have done the job of reviewing and improving processes, there are other things that need to be addressed which six sigma can’t do.

I expect it will go the same way as its predecessors - TQM, process re-engineering, CRM – not relegated but remembered as much for its problems as its benefits. And I hope that it will allow for a more realistic appraisal of whether a major proponent, Jack Welsh, actually did much good for business.

Microsoft as BPM platform

I have mentioned before that Microsoft is setting itself up as a platform company – Dynamics for business, Office for individuals, etc - to encourage companies to build industry-specific applications on its technology. Now I see that business process management (BPM) is another target – Microsoft Business Process Alliance. One of the companies mentioned, Sourcecode, is South African and better known for its product K2.net.

I do wonder though how long it will be before Microsoft comes up with its own BPM solution, and its partners become its competitors?

Thanks to Selling Power newsletter for the news.

Process overkill

I heard recently from a colleague who works in the IT division of a major South African bank about the incredible bureaucracy that exists in his company. The problem seems to be that the division has become mirred in its business processes, to the detriment of the business and to the results it is supposed to produce. For example, a project gets very high ratings because it follows process so closely, but no one gets scored down because what was produced was terrible.

Blogs elsewhere have talked about process angioplasty and end of process. The ERP industry has been a major proponent of business process efficiency, but it is about time people started to remember that the result is more important than the steps to get there. One problem is that following process has become a means that people use to protect themselves – the CYA phenomenon.

The problem seems to have started in the early 1990s, Michael Hammer being a major proponent. I would like to start asking how we get the pendulum moving back.