Maniacal Client Focus… It’s measurable!!

There is not a single enterprise in the world that doesn’t have client centricity at the core of how it defines itself. What differentiates some from others is to what extent they take that client centricity.

The most extreme form is what we at Genpact call… a maniacal focus on clients!! By that I mean doing whatever it takes to truly delight clients… not getting bound by contractual obligations or service level agreements… but taking decisions that deliver value to the client even though the decision may hurt you as an enterprise.

Here’s an example. A few years back we started an initiative called ‘Destroy Your Revenue’ where we told about 200 people in the company who served a strategic client, that let's say your revenue is a million dollars a year. If they could come up with ideas that actually reduced the bill for the client (by eliminating work, finding ways to do it differently) then their revenue and the company’s revenue would go down, and that’s fine because we would have added value to the client. The initiative was a success and we got tons of ideas that contributed to actually destroying our revenue. Here’s what happened next… the client fell in love with us… gave us more business… and we grew faster than ever before!

Most importantly, being maniacal means going above and beyond customer satisfaction (which is basic hygiene) to turning clients into passionate loyalists for life. because as we all know companies that ignore loyalty tread thin ice when it comes to financial success!! Given the link between loyalty and increased market share… higher revenue… lower costs, it’s critical to invest time and resources into developing loyalty programs. Building loyalty is critical at any point, but it takes on added meaning in today’s volatile world. Customers are more fickle these days… their expectations are greater. An effective loyalty strategy is not merely about keeping customers at all costs… it’s about developing loyalty among the most valuable customers. Therefore, it’s important to constantly relook at and realign the strategy guiding loyalty programs… and align it to the organization’s marketing strategy … because attraction and retention of clients go hand in hand.

The way to do this is have a dedicated customer loyalty and retention function and then use the data from that program to form the basis of the strategy guiding it. And then define the customer lifecycle and align to it their loyalty and retention efforts. It’s not about revenue creation…it’s about creating value that leads to revenue creation!! Companies need to focus on building value for clients that turns them into true evangelists and advocates – research shows that loyal customers spend more, become brand advocates and are much less likely to succumb to the overtures of competitors – that beats any marketing strategy hollow!!

At Genpact, we invest heavily in measuring, monitoring and building client delight and loyalty, at a granular level. So twice a year, we ask about 5,000 people in our client organizations whether or not they would promote us to others. We don’t just ask ‘are you satisfied with what we do for you’ but ‘will you promote me and what we do to other organizations?’ This is the Net Promoter Score methodology which is based on the theory that ‘willingness to recommend’ is a strong indicator of loyalty and growth…because when clients recommend you, they’re putting their reputations on the line. And they’ll take that risk only if they’re intensely loyal and believe in your value.

We drive the NPS methodology and its learning across the entire organization in a very structured and granular manner and we’ve been doing this for several years now. In fact, NPS is the most important metric that business performance is measured on – it’s embedded in all our processes, depicted visually across the floors, forms the criteria for rewards and recognition and is ingrained in every employee. As a result, we are at a historic high of 64% NPS which puts us at 1.8x of the market average. A recent Satmetrix study showed that average B2B & B2C NPS across mid- senior- CXO levels has been in the range of 23-24%.

In fact we’re now taking the NPS methodology over to the employee side of things to measure engagement (vs. satisfaction) and use that as the benchmark of how employees measure us… how we prioritize employee investment… and it makes sense doesn’t it…Clients and employees actually exist in a virtuous circle, where one drives the other. Investing in employees and empowering them can lead to increased employee engagement and productivity, which results in superior service delivery. This in turn translates into higher client satisfaction and loyalty and thus improved sales levels and better business results. Re-investing some of the profits into employee development continues to fuel growth and brings us back full circle!!

The Trouble with Being Efficient ONLY!!

The problem with most companies is that they think only about efficiency. Don’t get me wrong, efficiency is great – you take cost out, get things done faster and are more productive – but it gets people only so far … it cannot get the juices flowing the adrenaline pumped up and the passion to come through …. It just cannot ! . There are stories after stories of companies that have driven productivity and then have hit a wall.

The real multiplier value comes when you drive effectiveness. So let me give you an example. Let’s take a standard hiring process of any organization. The real process that one should think about is not the hiring process but the end-to-end process that straddles the whole organization from the time you define who you want to hire for a job to ultimately the person joining and delivering and producing results. Think about what people spend time on in that end to end process. The hiring team is measured on their metrics: how quickly can they hire the right person. The training team is measured on their process: how quickly can they train. In reality, the right metric is end-to-end: How do you get the right person on the job that delivers effectively as fast as possible?

It’s quite likely that it is better to spend double the time on hiring because that allows you to spend one-third of the time on training and the probability of an effective person is higher and total end to end time shorter …. that’s effectiveness !!

But that’s not the way organizations are structured. Enterprises are structured as functions in silos. Processes on the other hand that delivers outcomes straddle from one function to another. There’s leakage of output in this straddle. There’s sub-optimization at the overall process level because each person who owns a function is trying to optimize their piece. It’s very difficult for organizations to get together and say we will optimize the overall process to produce the best outcome. And, by the way, the best outcome is not the total cost that I spend in hiring a person. It’s “I’ve hired a person who was effective on day two and produced fabulous sales on day five. And that, by the way, generated a hundred million dollars of sales “versus the cost benefit that I’d have got if I had done this cheaper and more efficiently maybe a hundred thousand dollars benefit.

Organizations in every case tend to focus on efficiency as functions and therefore sub-optimize the overall outcome that the process could deliver.

If you go and ask a company at the CEO or CFO level and say, “so how good are your processes ? " I’ll tell you the three answers they’ll give you:

1) " They are good or bad” - They won’t say how good or bad.

2) " I think I can improve my processes by x percent a year”

3) " I don’t know”

If you were to measure a number of these processes across large corporations and compare processes that are run really well in some companies vs. being run badly in other companies – the difference could be five to ten times better. For instance, there are companies that close their books in two days and those that take forty-five days. There are companies that pay bills to their suppliers in twenty-four hours and other companies that struggle to do that in ninety days. Some have a 5 % defect rate in goods shipped against orders while others have a 0.5 % defect rate. There has to be a way by which you can take the learning from the twenty-four-hour-payment company and transport it to the ninety-day-payment company and the value that you get there is not the efficiency value and the cost value, but the working capital of a billion dollars being released or the ability to capture 2 % extra discount on all your purchases from suppliers …. Effectiveness or outcomes!!

You can actually go to the granular level with granular metrics for any process in the world and define what "best in class" is. Some of us at Genpact have been on this journey to build this "Science of Process” for the last 15 years. We spent the first ten years collating data from running a number of these processes across companies and industries – we pulled all that together and said, so this particular process, how does this company run it versus that versus third versus fourth.

The interesting thing is sometimes the processes are pretty much the same or should be the same across completely unconnected industries. Why should a pharma company reconcile accounts or close their books dramatically differently than an automotive company? The reality is they actually do. So it’s not saying how I do this entire process better. It’s actually saying how do I do this little step better and the second step better, and the third step better, and for each of them there is a best in class. For each of them there is a connection to if I drive this improvement in this little process then here is the better outcome it produces!

How does one even begin to embark on this journey? It has to be in your DNA, a DNA of Lean, Six Sigma, and process granularity. Every process that we run for our clients, we measure at an extremely granular level. We collect all that data and create benchmarks. When we drive improvements, we know what drove that improvement and how much improvement was driven. We’ve done that for fifteen years. The missing link here was how to build it back into a framework. That’s the "Smart Enterprise Process” SEP framework that we started building about five years back.

We now have built it for twenty-six different processes across the world. And the fascinating thing is when we do a diagnosis of a company’s processes and go back telling them exactly which little step to improve which will result in outcome improvement – it shocks the wits out of them!! In fact, they are completely flabbergasted because they have always believed that they run their process really well. They’ve also believed that the improvements they typically can drive are five percent, ten percent versus five times, ten times which is what we’re able to deliver. Of course you have to measure outcome improvement Vs just efficiency.

That is the whole basis on which we have built “The Science of Process " and the more people learn it, which is learnable like any other science, the more people apply it. The more people use it and deploy it, the more value that they can generate for themselves, for their organization and for enterprises.

And by the way it’s not just about Technology!!

Culture doesn't eat strategy just for breakfast but for breakfast, lunch and dinner!

The phrase coined by Peter Drucker and later publicized by Ford’s Mark Fields had the right intention… but wasn’t quite on the mark. Strategy is important – and 80% of the books on management in any typical bookstore endorse that view. It’s important to know where you’re going, why you’re going there and how you’re going to get there. It’s important to know where your competitors are, where the market’s going and to figure out how you’re going to win in that space. However, the differentiation between companies is often not in the strategic path they took but in fact in the culture they drove in order to be successful with those strategic paths. And it can lend itself both ways – in using those strategic chosen paths to drive change because their culture allows them to be flexible and change … or not change at all because culturally they’re not wired to do so !! And that means that strategic chosen path never delivers results.

And therefore, I would say that while strategy is important, it’s even more important to have a culture that allows you to evaluate strategy openly. And call out a mistake when it’s a mistake and then change direction. If you are going down the wrong path, it’s okay if you have a culture that allows you to change direction. But if you have a culture that doesn’t allow you to do that, you’re doomed. Which is why I would argue that culture doesn’t just eat strategy for breakfast… it’s much bigger than that and therefore eats strategy for breakfast, lunch and dinner!!

If you ever want to pick the one thing that actually differentiates organizations, people, teams… it’s actually culture. Culture is about how you deal with situations, how you behave with each other, how you solve problems together, how you solve a client problem, how you approach opportunities, how you make trade-offs and how you take risks. Every one of those is deeply entrenched in a company’s culture.

Here’s the other thing about strategy versus culture. Strategy can be copied. The problem with copying strategy of course is that you lose the first-mover advantage. You kind of could become a ‘me too’. But it still can be copied. Culture cannot be copied. So if your differentiation is culture, first of all it’s a differentiation that’s built on your history, your legacy, who you are and how you got there. You know all of that and then you teach people all of that. And that proliferates that culture.

In our industry, for example, everyone uses Lean Six Sigma. Everyone talks about process, everyone talks about technology. So that’s not the differentiation. The differentiation is what’s the culture that you created that actually uses it. How does it permeate? How is it rewarded? How is it punished? Copying that is very difficult. It’s deep inside the DNA. It takes years to build and proliferate. And therefore, if your differentiation is built on culture, it’s a long-lasting differentiation. It’s a differentiation that’s not easy to copy and as long as it’s a culture that’s a winning culture, you will continue to win.

The Art & Science of Building a Career

Over the years I’ve come up with my own theory of how to build a career.

I think about building careers along three dimensions… let’s call them X , Y and Z.

The X dimension is the type of skills that different roles require. So finance skills vs. technology skills vs. marketing skills etc.

The Y dimension is the type of cultural environment in which those skills are used and exploited. It could be which geographic regional culture like American vs. European or it could be the type of business… like family-oriented entrepreneurial group vs. multinational environment or it could be hierarchical vs consensus driven culture etc etc

The Z dimension is the industry domain that that role belongs to …. Consumer financial services vs insurance vs healthcare vs retail etc

Every role can be defined along these three dimensions and as you go through your career you must do three or four things. One you need to make sure you really become an expert at one dimension at least – and do that early in your career. I’m a big believer that as you go through a career, you’ll always be known for one or two things that define you …. almost a safety net. So if everything else is lost, you can go back to your core.

The second rule is to change one dimension every time you move from one role to another. But don’t change two dimensions if you can avoid it and please don’t change three dimensions because that’s a disaster!!

The third is that over a period of three or four moves, change all dimensions. So if you look at role number one to role number four, you should have changed all three. And then you’re in a different culture, in a different industry, in a different domain!!

This way, you can almost chart your career as multiple potential options. So when I was working in highly change-oriented organizations like Unilever, Citibank, and then GE, every time I was asked to move jobs within the organization, it took me pretty much ten minutes to say yes or no because all I needed to do was fit it into this model. So I changed six roles in three years with Citibank. I changed four roles in six years with Pond’s and Unilever and I changed five roles in five years with GE and GE Capital in the early part of my career at GE …. I said yes in 100 % of those situations but that’s a different story I will tackle another day !!

But like most successful ‘mantras’, this one has to be a blend of art and science. The dimensions and rules are the science part of building a career… but you need equal parts of ‘art’ to build a successful career and this comes from investing in longevity, relationships and passion.

The generation that is getting into the workforce today is more impatient, more exposed, and they probably are more knowledgeable. They want everything in life… their gratification has to be instant!! When we hire people and look at resumes, we don’t care what a great job someone is doing today or yesterday, if the resume shows six jobs in ten years, they have zero chance of even being called for an interview. Zero chance! We just don’t call them because no amount of telling me why they did what they did is going to convince me that they’re going to last.

Equity gets created only when time is spent. Knowledge gets created only with time… when you combine intellect with experience. So one of the biggest things that I would tell people coming out of universities into the workforce and joining the workforce today is do not underestimate time, and do not underestimate relationships and both require equity. If someone were to ask me the one joy that I’ve got over twenty-five years of a career, I would say it’s seeing people who have worked with me, who have worked for me, and are now in probably bigger jobs than even they dreamt of . And I can look at them and say part of the reason they are who they are is because of the fact that, "we worked together. "

And the last thing I’d say is to be extremely passionate about what you do. Like Steve Jobs said do what you’re passionate about and be passionate about what you do, otherwise don’t do it. When the two match, there is no difference between work and play. I work twenty-four hours though I might not be in office… because I love what I do. I’m really passionate about what I do. And I think if people actually gravitate to doing things, whatever it is, that combine those two, then I think the chances of being hugely successful is so much better.