value insights

Which Organization Outcomes?- Valutrics

Which outcomes are relevant to an organization? How does an organization select one? Identifying and selecting outcomes is part of developing an appropriate business strategy. The current position, desired competitive advantage, and availability of resources dictate the outcomes to a certain extent. Outcomes are broken down into goals for large, multinational organizations. Following are examples of typically desired organization outcomes that become the goals.
◾ Growing market share—Increase the current market share of the organization. This outcome is based on organizational capabilities to increase the volume of current product and services or add new products and services. Optimized manufacturing adds new products quickly and easily. Similarly, optimized services (e.g., postal service adding parcel services), can expand offerings with ease. Optimized processes are the key to growing market share.
◾ Providing solutions—Business capabilities can scale vertically or horizontally resulting in a complete solution provider based on the value stream. Based on a single vendor, this results in a “one stop shop” for a customer—providing convenience to acquire the product or service, an increased comfort level and legal protection. The business also sends signals to the market that it has a strong commitment to provide complete business solutions. Acquiring or merging with another complementary/ supplementary business where in-house capabilities are inadequate is part of this strategy. The acquisition or merger makes customers feel more comfortable and confident in engaging with a re-branded organization.
◾ Optimizing knowledge resources—The planned structure (or restructure) as a capability needs to generate growth opportunities for employees with business and functional skill sets and also provide opportunities to the current staff to upskill and grow into other organizational future employment needs. The understanding of these knowledge capabilities aid in achieving organizational strategy.
◾ Utilizing disruptive innovations—The organization utilizes IT as an enabler of the business. This may require the organization to innovate in a way that it impacts customers, competitors, investors, and society positively, and starts differentiating the company from others. Knowledge that IT gathers during product development helps in speeding up implementations. This assists in changing the current perception IT having long delays in package implementation. Quick implementation also assists in growth of CRM and ERP sales. This requires business capabilities that provide the advantage of either products, costs, price, or market innovations when entering new markets.
◾ Focusing on business—The products and services are conceptualized and designed based on the core capabilities of the organization. Strategies keep business as a constant focus; they are dynamic and adaptable as the business context shifts. The business capability-based architecture provides the organization with a better business focus. Capabilities are uplifted to keep pace with the changing needs of customers. The capabilities facilitate changing needs from product design to those suitable for the future needs of customers and providing required solutions customized for customer growth needs.
◾ Ensuring flattened organizational structure—Current organization structures could be based on processes, products, and services. In order to move quickly in the business market, this requires an organizational structure change from the products and services siloes to the capability providers and service builders. This reduces duplication of skills and optimizes the organizational resources.
◾ Using capability metrics—Changes from current product-based metrics to capability based metrics. The performance management system is realigned with business metrics. The marketing and sales focus on total product solutions. Marketing strategies are realigned with the strategic positioning and based on advantage capabilities. Marketing as a capability is transferable within the organization.
◾ Innovation with technology—Innovation in technology is adopted on the basis of suitability to solutions and customer’s requirements that could reduce total cost of ownership.
◾ Maintaining a low cost of capital—Organizations can leverage the infrastructure of multiple development and production centers to extend product development activities. These centers are well resourced with capabilities for software development and training. Low-cost capital required for product development assists in reducing the package solution costs and grow the market adoption of these packages.

There are many market differentiators that enable achievement of business outcomes. These outcomes eventually dictate why customers engage with the organization. This engagement is a function of product quality, brand values, and cost. In order to succeed in a particular market-space, organizations need to excel in at least one of three following disciplines:

a. Operational excellence
b. Customer data service
c. Product leadership

These disciplines are all related to business outcomes, which in turn, are closely related to strategy elements. Out of the three types of business outcomes, organizations focus on the one that provides the most value while remaining aware of the other two outcomes. For example, if the organization goes for product leadership, it still needs to be aware of good customer service and maintain operational excellence. By keeping the focus on one discipline, the organization increases its chances of success.

Operational Excellence and Business Outcomes
Choosing operational excellence as the area to excel requires the company to have a desirable product at the lowest cost in the market. This means that all the costs associated with building and delivering the product, including any re-work through a lapse in any process, are as low as possible. As there is a base cost associated with manufacturing of the product, the cost of additional work and re-work needs to be minimal. This means the operational processes are at maximum efficiency.
The organization also collaborates with partners to reduce costs. For example, a manufacturer keeps inventory at a minimum, requesting suppliers to deliver products in a short turn around time. Thus, the organization can offset the costs of maintaining a huge inventory by collaborating with its suppliers.
The organization chooses the changing market segment based on how it can respond most efficiently and profitably to its customers. The market segment decision is also based on internal resources (people, technology, and processes). BA provides an assessment of the capabilities and resources required to save that market segment. Timely information on products and customers to all departments and channels helps create and serve market segments irrespective of the channel the customer chooses. The call center needs the most up-to-date information on order status for customer inquiries. Sales, marketing, production, and order fulfillment functions need this information in real time for excellence in service. Inventory and delivery information from partners is also required in real time.
Thus, operational excellence implies organizational processes operate with maximum efficiency and minimum cost. Seamlessness, from order placement to fulfillment, is imperative for operational excellence. Similarly all supply chain processes are vital for operational excellence.

Customer Data and Business Outcomes
Customer-centric organizations go beyond merely sales and service and enter the area of customer value. These organizations are keen to see their clients succeed. This shifts the focus from just being a supplier to an organization that is part of the customers’ journey. This approach is a winwin situation for both organization and customer. This requires detailed knowledge of customer needs, buying habits, and operating style. This knowledge is easy for small local business owners, who deal with customers face to face. The digital world offers this information from various sources like social media, mobile, and IoT. With this information, relevant products and advice are offered. For example, a bank lets its small business customers have access to aggregated information on the demographics of the customers in its operating local area. Once the hobbies, interests and lifestyle of the local neighborhood are available, the local businesses can tailor products to suit the customer community.
Personalized knowledge of the customer requires technologies and systems. For example, many banks are modeling the customer experience “from cradle to grave” as a life cycle. This requires information management and analytical capabilities to understand the products and services required at different stages of a customer’s life. Customer analytics is also aligned with sales and marketing capabilities. The customer is proactively engaged in creating options for products and services. The technologies and systems are geared toward sharing real-time information of customer communications to cross-sell or upsell the products. Thus, customer intimacy is an important business outcome.

Product Leadership and Business Outcomes
Organizations differentiate themselves by having a product that is a ‘must have’ for the customer. The branding of the product entices the customer to buy irrespective of cost. For example, certain shoes and clothes retailers are preferred brands over similar quality and possibly cheaper alternatives.
Kano * defined a product by categorizing its features by perceived customer value. Below are three features of a product that need to be considered carefully in order to achieve product leadership.
◾ Essentials—product features that customers consider essential for purchasing;
◾ Linear—product features that are linearly valuable, i.e., those where doubling an element of the feature is perceived as being twice as desirable;
◾ Delighters—product features that delight a customer, usually only a small number is necessary.
The opportunity window to create and sell a new and niche product in the digital world is very short. Leaders in product development move fast to make the most of this short window. Such organizations are business agile. They have a succinct business strategy, hire the best people, and promote a culture of excellence and innovation. Decisions are taken quickly with clear and straight forward guidelines. Agile teams are encouraged to try new and unique ideas and come up with pioneering products on a continuous basis.