Create an operations process to serve your right customers

Once you have described your right customers, created generic and specific strategies to achieve success, and designed a sales process to acquire those right customers, you will turn to the internal day-to-day operations. Your objective here is to design your operations to best serve your right customers.

Although this seems like an obvious objective, the operations of many firms have evolved into a basket of activities that spring from bureaucracy, internal convenience, and habit. The customer has simply been left out of the design process.

The operations process is somewhat similar in concept to the sales process. It is a collection of best practices. But in this case it is a collection of practices that best allow you to serve the right customer in the delivery of your product or service.

For example, let’s assume that you strive to be a low-cost company. Your objective is to continually drive down your own costs so that you can offer low prices to your customers—customers who highly value those low prices. If you were a retailer, you might encourage customers to bag their own purchases, saving costly labor for baggers. Then you’d position that activity positively by informing the customer of their cost savings through a modest bit of work.

Conversely, let’s assume that you strive to be a company differentiated by customer service. Your objective is to truly stand out, not merely be an also-ran. If you were a retailer, you might wrap your customers’ purchases in eye-catching boxes, you might have a friendly assistant load the purchases into the customers’ cars, and you might even deliver out-of-stock purchases directly to the customers’ homes.

Every company has some collection of operational activities—things they do to deliver their products and services to their customers. You just want to be sure that your activities are part of an effective process, a structured and purposeful series of activities best designed to implement your strategies.

Remember that check-out lady at the specialty store in the Pike Place Market? She was implementing an operation (obtaining payment from the customer) necessary to the business’ success (they need to collect revenues). But the check-out activity and her demeanor simply didn’t fit with the store’s high-end image and high prices.

Designing an operational process that accomplishes your strategies requires some careful thought. Oftentimes, it also requires that you change some operations that simply don’t fit your business. The best way we know to accomplish this is to document your current activities, and then to improve those activities to fit your strategies.

You might choose to document your current activities by simply describing them in words. Alternatively, and the option we prefer, you might depict those activities in a diagram.

Using a diagram to illustrate your day-to-day operations allows you to see the overall pattern of activities at a glance. It also shows the interactions, and interdependencies, of the individuals and the groups within your organization. This makes it relatively easy to determine possible improvements for the overall process.

For example, the following diagram shows just a portion of the operational diagram for Mike’s company. Mike runs a firm that does high-end residential remodeling—they turn good homes into spectacular living spaces. The diagram represents a small portion of the activities that Mike’s company conducted before they made improvements in the process.

Operational Diagram Before Improvements

In this section of the operational diagram, Mike and his team described the steps that occurred when the internal walls of the new addition were put in place. In the early days of Mike’s company, he thought that a quick sweep of the floor at day’s end, and a time to retrieve all the nails dropped by his carpenters, was a good way to save costs.

After some experience and several interactions with customers, Mike realized two important things: First, he realized that he had been pursuing a false strategy to save costs. He determined that picking up nails at the end of the day (or at any time) was a money-losing activity. So, he deleted that step from his operations. His thought now was Don’t Pick Up Nails.

Second, he found that his customers were very concerned about dust drifting into their current living space. So, Mike changed his operations to reflect these two new ideas. Here is the same portion of his operation with the new changes. You’ll notice that the laborers now have time to help the carpenters with the roof, because they no longer are picking up nails.

Operational Diagram After Improvements

It turned out that Mike’s customers were so concerned about dust in their homes that they wouldn’t proceed with the project unless they were reassured that this wouldn’t be an issue. Consequently, Mike’s firm adopted two new activities to further prevent dust from entering the current living areas of the home. At the beginning of a project, not shown on the small section of the previous diagram, Mike’s firm installs temporary partitions to segregate the work areas from the living spaces. And all throughout the project, the workers wear cloth shoe covers whenever they enter the customer’s living spaces. This is all in keeping with the firm’s strategy to provide distinguishing customer service.

Although Mike’s firm is focused clearly on customer service, it can’t ignore the operational efficiencies that will help it to make a profit. Thus, it has adopted the phrase “Don’t Pick Up Nails” to represent the overall operating philosophy of the business: Focus on the important things and ignore the many trivial activities that will only be distractions.

In contrast, let’s assume that we created an operational process for a builder of tract homes. Their job is to build new homes in an efficient manner. These new homes are, of course, unoccupied.

In this case, the process would look somewhat different than Mike’s. For instance, the tract home builder would not even consider daily sweepings, because there would be no homeowners to be concerned about the dust. Daily sweeping would present an unnecessary cost to the contractor and a distraction to the workers.

Furthermore, the tract home builder wouldn’t adopt any of Mike’s new activities. This firm certainly wouldn’t install temporary dust barriers nor would it have its workers wear booties.

We can see, then, that the creation of the firm’s operational process clearly is driven by the customer. Whether your firm is a low-cost provider or a company that is differentiated by its products or its customer service, the operations of your firm should be focused on how to achieve the strategies that best serves your customers.

A major benefit to documenting the process, whether by diagram or otherwise, is the transparency it provides to everyone in the firm. Engaging the entire team in the process is essential, because much of the operational knowledge, as well as many of the operational improvements, come from those directly involved in the operation, rather than exclusively from management. This also provides a common ground of shared creation; when everyone contributes, everyone takes pride in the end product.

Through time, your firm should look continuously for ways to improve its operations. This will serve your customers in some better way and improve your firm as well.