Book Citation for Sense and Respond by Stephen Parry.
Strategic Performance Management:Book Citation Extract Synopsis
The following text is an extract featuring the work of Stephen Parry and Susan Barlow while they were at Fujitsu Services. Bernard Marr ran independent studies to demonstrate the effectiveness of their work. Published research is referenced at the end of this article. More information can be found in Sense and Respond: The Journey to Customer Purpose by Parry and Barlow (Palgrave 2005)
Strategic Performance Management: Leveraging and Measuring your Intangible Value
An enabled learning environment in practice:
The case of Fujitsu Services: Sense and Respond.
Fujitsu Services is one of the leading IT services companies in Europe, the Middle East and Africa. It has an annual turnover of $l .74 billion, employs 14500 people and operates in over 20 countries. It designs, builds and operates IT systems and services for customers in the financial services, telecommunications, retail, utilities and government markets. Its core strength is the delivery of IT infrastructure management and outsourcing across desktop, networking and data centre environments, together with a full range of related services, from infrastructure consulting through to integration and deployment.
In Fujitsu Services, the helpdesks provide a critical function. These helpdesk call centres represent an integral part of service delivery and the primary point of contact for customers. If you are a customer that has outsourced their IT infrastructure management to Fujitsu Services, the helpdesk would be your point of contact if anything goes wrong or if you experience any problems with your computer hardware or software. Helpdesk agents can then either solve the problem or pass the work on, e.g. to an engineer who then comes out and fixes the problem. It is often argued how call centres are changing the way companies communicate with customers and that they are a strategic asset in delivering exceptional service quality. Many organizations believe they are using their call centres to differentiate their product or service offering, to build and maintain customer relationships, and drive customer satisfaction.
The reality, however, is often very different. I am sure most of you can relate to the aggravation that is often caused when customers try to contact call centres or helpdesks. It often starts with a finger ballet to communicate with the interactive voice response (IVR) system, then endless queuing listening to the same irritating piece of music, and when we finally speak to someone they can sometimes be abrupt and unhelpful. Instead of treating call centres as service providers, they are often treated as unnecessary cost centres that have to be squeezed for efficiency In many cases this is due to outsourcing service level agreements, which specify performance targets of everything that is easy to measure such as queuing time, the number of calls taken, or average call duration.
There was a growing realization at Fujitsu that the traditional approach to Performance Management was failing customers. Operating in the IT outsourcing sector, Fujitsu found it almost impossible to differentiate itself in a very aggressive marketplace. A functional focus resulted in a lack of cohesion and fragmentation. Not dissimilar to other call centres, many client accounts were operating at contractual obligation levels and no higher, while 15% of client accounts were at critical levels of dissatisfaction and were unlikely to be renewed. Furthermore, the turnover of front-line call centre staff was 42%
The message was stark for Fujitsu - it had to rethink its Strategic Performance Management approach if it wanted to stand out from the crowd. What Fujitsu found was that the traditional way of measuring and managing performance stood in the way of a new strategic approach towards Performance Management. Fujitsu changed both the way that it approached Performance Measurement and Performance Management. In addition, Fujitsu saw this as an opportunity not only to redesign the organization but also to change the way Fujitsu worked with its customers. It was clear that customer satisfaction had to be a given. However, what Fujitsu wanted to change was its relationship with its customers - from service level contracts to a partnership model where customer success became a new goal. For this, it was critical to understand what was creating value for customers and what was not.
Fujitsu recognized that information about what was creating value for its customers had to come from its front-line agents, since they are the ones speaking to customers all day long. However, the way performance was measured - with a strong focus on efficiency measures prevented call centre agents from spending time 'listening' to customers.
All focus was on speed and numbers. The first step Fujitsu took was to remove these measures from front-line employees to avoid the 'measurement trap' and prevent dysfunctional behaviour. Call duration and number of calls are still important indicators for managers to ensure the correct levels of resourcing, but they are the wrong measures to influence the behaviour of front-line agents.
Fujitsu realized that if front-line agents are measured and rewarded on overall service delivery, they are the ones who can help to improve exactly this. They can provide critical information about service shortcomings, possible bottlenecks, and future innovation. For that reason, Fujitsu changed its approach and started to treat call centre agents as knowledge workers and began to leverage their knowledge for process and product innovation.
In order to create the context for knowledge work, the second step was to establish what I call an enabled learning environment. Fujitsu redesigned its management approach with a new emphasis on people, the problem-solving process and value creation. This involved a change in management style with leadership principles based on intrinsic motivation and the creation of possibilities for others to succeed in a way that provides choice, not ultimatums.
It involved the identification of training needs, the deployment of new skills, and the reorganization of roles and responsibilities. The hierarchy within Fujitsu was essentially turned upside down. The role of managers was changed from one of authority to one of support. The central responsibility for them became the provision of the necessary knowledge and tools to allow front-line staff to handle the needs of the customer and assume responsibility for the end-to-end service, even if that service left the confines of the helpdesk at Fujitsu and was transferred to other client suppliers.
Today, dedicated front-line teams take on the role of establishing how they add value to their clients. They address questions such as 'what do our customers want to achieve?' and 'what is Fujitsu's role in this?' Its new Strategic Performance Management approach enabled Fujitsu to move from a make-and-sell mentality toward a sense-and-respond mentality.(24)
To understand how Fujitsu is creating value for their customers, front-line agents create a value creation map - a visual representation of the value proposition to their customers and the key competencies and performance drivers required from Fujitsu to help deliver the value proposition. In a so-called 'intervention process', front-line agents analyse the customer requirements and map out how they can help to deliver these. This often involves a visit to the customer sites to better understand their environment, working conditions, and value proposition. Subsequently, the front-line agents design appropriate performance indicators which they own, review, and act upon.
One of Fujitsu's customers is, for example, an airline company that has outsourced its IT management to Fujitsu. Airline employees would ring the helpdesk if they experienced any problems with their IT equipment (e.g. printer doesn't work or servers are down). The success measures for the helpdesk team which handles the airline calls will be the overall service rating from the airline, i.e. has the IT infrastructure been managed satisfactorily by Fujitsu, instead of 'have the calls been handled within 2 minutes'. Front-line employees in Fujitsu now analyse and classify incoming calls in order to understand whether they are 'creating value' or 'restoring value'. The latter might be preventable by improving processes as part of Fujitsu's service delivery, e.g. an engineer didn't turn up soon enough to fix an essential ticket printer at the airport and the customers are chasing up. Front-line agents now look at what kind of calls they are getting and see what they tell them about their overall end-to-end service delivery.
They might get calls because other parts of the business are not delivering and therefore customers are chasing their products. Trying to knock off a few seconds to optimize such calls would clearly be the wrong thing to do; instead, this information needs to be passed on in order to improve performance along the entire value chain. Cross-functional performance improvement meetings are used to explore how overall service delivery can be improved, and the input from front-line agents is of critical importance. Here new processes are established to ensure, for example, that either the engineer turns up more quickly the printers are replaced with more reliable printers, or maybe clients are trained to fix essential equipment by themselves.
Sometimes, sub-optimal processes in the customer organization are responsible for problems with the IT systems and are, therefore, preventable calls. In such cases the information is fed back to the clients so that they can improve their own internal processes. In one case, Fujitsu discovered that many employees were ringing to reset passwords at night, when no helpdesk was available for that client. This meant that they sometimes had to wait hours until the helpdesk agents were available again in the morning to reset a backlog of passwords. Instead of arranging 24-hour helpdesk service, the solution was for the client company to change their processes and give some of their employees the ability to reset passwords when the helpdesk was not available. Under the old regime there would have been no incentive for anyone in Fujitsu to suggest this approach. For the airline company helpdesk intelligence has managed to reduce queues at ticket offices, check-ins and boarding gates. Calls into the helpdesk have fallen by 30, system availability has increased, and client IT operating costs have decreased.
This new approach created completely new relationships between Fujitsu and their clients. Instead of operating at only contractual obligation level according to efficiency measures specified in service level agreements, Fujitsu now operates on a partner level that allows mutual performance improvements. Commercial contracts between Fujitsu Services and its clients had to be restructured to realize mutual benefit from call reduction and mutual value maximization. The results of this change in the way performance is managed in Fujitsu Services are impressive. Today, Fujitsu achieves 20% higher customer satisfaction, and was further able to increase its employee satisfaction by 40%. Its staff attrition decreased from 42% to 8%, operating costs decreased by 20%, and contract renewal and service upgrades amounted to £200m. Since implementation of its new Strategic Performance Management approach, Fujitsu won the National Business for the Best Customer Service Strategy and was awarded the European Call Centre of the Year award for the best people development programme.
Today Fujitsu is continuously redesigning its capabilities and offerings, not based on market intelligence but on customer-knowledge and Strategic Performance data. Fujitsu recognized the potential of a new Strategic Management approach and applied it in a wider context. In addition to the helpdesk environment, these principles have now been applied to many other parts of the organization.
I believe that this case study demonstrates the power of an enabled learning environment and how it can help to make Strategic Performance Management a reality. It enables organizations to continuously learn and innovate, and therefore ensures long-term success.
The time is right for more organizations to think about their Strategic Performance Management processes and how to create an enabled learning environment.
References and end notes.
24 See for example: Parry, S., Barlow, S. and Faulkner, M. (2005).
Sense and Respond: The Journey to Customer Purpose. Palgrave
Strategic Performance Management by Bernard Marr: Book Description
This book is about strategic performance management for the Twenty-First Century organization. In a practical step-by-step approach it navigates readers though the identification, measurement, and management of the strategic value drivers as enables of superior performance. Using many real life case examples this book outlines how organizations can visualize their value creation, design relevant and meaningful performance indicators to assess performance, and then use them to extract real management insights and improve everyday strategic decision making as well as organizational learning.
A key focus of the book is the important issue of creating value from intangible assets. Much has been written about the importance of intangible assets such as knowledge, skills, relationships, culture, practices, routines, and intellectual property as levers for organizational success. However, little has been published that tells managers how to do that.
This book moves beyond just raising awareness and provides practical tools and templates, gathered in many extensive case studies with world-leading organizations.
The key issues the book addresses are:
• How do we identify the strategic value drives, especially the intangibles, in our organizations?
• How do we understand their strategic value using the powerful mapping tools?
• How do we then measure the business performance?
• How do we use performance indicators to improve decision making and organizational learning?
• How do we align performance reviews and risk management with our strategy?
Well grounded in theory and packed with case studies from around the world, this book will function as a guide for managers as well as a reference work for students and researchers. The tools described in this book are not only suitable for leading international corporations, but have been designed to be equally appropriate for not-for-profit organizations, central and local government institutions, small and medium sized businesses, and even departments and business units. The ideas, tools, and templates provided allow managers to apply them straight away and transform the way they manage strategic performance at all levels of their organization.