Post on 16-Jan-2016
Why Innovation of an On-going Operation Pays for ItselfApril 18, 2011
Ground rules
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• Ask questions
• Group discussion encouraged
How to innovate a process
1. Start with the customers’ value proposition
2. Change how you measure success to drive customer focus
3. Experiment in order to learn4. Pace your investment of time and
money to avoid large failures5. Prioritize initiatives within a portfolio
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Who is the customer?
Can you pick out the customer?
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Implications Strategies TacticsFactors
What factors drive them?
University customers will buy technology locally
University customers will buy technology locally
Traffic down Mainway may be 50,000 people/day
Traffic down Mainway may be 50,000 people/day
Prior efforts at technology retail have failed
Prior efforts at technology retail have failed
Trustees expect operations to self fund
Trustees expect operations to self fund
HP, Dell and Apple are clamoring to get on campus
HP, Dell and Apple are clamoring to get on campus
A technology store here could gross $6MM
A technology store here could gross $6MM
A cool brand name (name, look, and feel) is needed
A cool brand name (name, look, and feel) is needed
Processes to make speed, friendliness, cleanliness, and in-stock are needed to make the bottom line work
Processes to make speed, friendliness, cleanliness, and in-stock are needed to make the bottom line work
Rapid launch will reduce costs
Rapid launch will reduce costs
Performance:•Walk-through Audits•Bi-annual evaluations•Adjust operating model
Performance:•Walk-through Audits•Bi-annual evaluations•Adjust operating model
Branding/marketing•Freshman orientation•Employees trained to chat up customers on buying advice•Urban tech, mood lighting graffiti floor, big screens•email
Branding/marketing•Freshman orientation•Employees trained to chat up customers on buying advice•Urban tech, mood lighting graffiti floor, big screens•email
Use integrated management approach starting with very detailed modeling down to merchandise and monthly projections and including project management
Use integrated management approach starting with very detailed modeling down to merchandise and monthly projections and including project management
Brand as “Wired Out”Brand as “Wired Out”
Focused Score Card:•Financial Measures•Customer Measures•Internal Measures•Learning & Growth Measures
Focused Score Card:•Financial Measures•Customer Measures•Internal Measures•Learning & Growth Measures
Business Planning•Business plan•Focus scorecard•Construction plan•Merchandising•Process maps•Marketing/promotion
Business Planning•Business plan•Focus scorecard•Construction plan•Merchandising•Process maps•Marketing/promotion
A detailed business plan including concept document is needed
A detailed business plan including concept document is needed
Other colleges have cracked the code
Other colleges have cracked the code
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Our market responds to cool, urban tech
Our market responds to cool, urban tech
Engage vendors in supporting and funding the project immediately
Engage vendors in supporting and funding the project immediately
Vendor Relations•Engage in planning•Merchandise advice•Negotiations
Vendor Relations•Engage in planning•Merchandise advice•Negotiations
Value Statement
Drivers
Value
Jan Y1 Feb Y1 Mar Y1 Apr Y1 May Y1Schedule
Benefits
Actions
Value Statement
Drivers
Schedule
Actions
11
Launch new campus technology store providing recommended technology solutions to students, faculty, staff and other customers of the university in order to provide improved service to our constituents
Assess the characteristics of the market Develop a concept book to guide design, branding and construction
of the store Develop a detailed business plan from the concept book to define
store branding, design, merchandising, promotion, staffing etc. Develop detailed business process maps including receiving,
customer service, cash management, merchandising, returns, repairs, inventory etc.
Manage store development including branding and construction efforts
Conduct post-opening performance assessments and recommend operating improvements
Launch Technology Store for the Largest University in the U.S.
• Students and parents are concerned about which solution to buy and making mistakes which are costly
• Campus is a convenient location for a technology store due to proximity of market
• By leveraging its buying power the univesity can provide a high service offering with advice and local support/repair through university IT
Process Build-out
Business Plan
Develop Concept
Construction
Investment $200,000
Return $600,000
1st Year ROI 200%
Payback period in years .33
Q2 Y1 Q3 Y1 Q4 Y1 Q1 Y2 Q2 Y2 Q3 Y2 Q4 Y2 …
Grand Opening
Time Issues Revenue
Value Statement
Drivers
Value
Jan Y1 Feb Y1 Mar Y1 Apr Y1 May Y1Schedule
Benefits
Actions
Value Statement
Drivers
Schedule
Actions
11
Launch new campus technology store providing recommended technology solutions to students, faculty, staff and other customers of the university in order to provide improved service to our constituents
Assess the characteristics of the market Develop a concept book to guide design, branding and construction
of the store Develop a detailed business plan from the concept book to define
store branding, design, merchandising, promotion, staffing etc. Develop detailed business process maps including receiving,
customer service, cash management, merchandising, returns, repairs, inventory etc.
Manage store development including branding and construction efforts
Conduct post-opening performance assessments and recommend operating improvements
Launch Technology Store for the Largest University in the U.S.
• Students and parents are concerned about which solution to buy and making mistakes which are costly
• Campus is a convenient location for a technology store due to proximity of market
• By leveraging its buying power the univesity can provide a high service offering with advice and local support/repair through university IT
Process Build-out
Business Plan
Develop Concept
Construction
Investment $200,000
Return $600,000
1st Year ROI 200%
Payback period in years .33
Q2 Y1 Q3 Y1 Q4 Y1 Q1 Y2 Q2 Y2 Q3 Y2 Q4 Y2 …
Grand Opening
Time Issues Revenue
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What is it worth?
S&P 500 39%
ACSI Stock Portfolio 145%
0% Year 6
ACSI Laggards
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10 April 18, 2011© 2010 GBQ Redbank Advisors
What is your value proposition?
Your value proposition
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In the customer’s terms– Financial– Convenience– Information– Speed
Know what par isCustomer’s priority scheme
© 2010 GBQ Redbank Advisors
For wired out
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Convenience of campusLocal serviceAdvice about choicesConfidence in system’s abilityConvenient accessoriesGreat gifts for students and
siblings at homeParents’ peace of mind
April 18, 2011© 2010 GBQ Redbank Advisors
For service organization
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Customer service levelsIntegration into strategic
frameworkA track record of improving
financial and other metricsLeadership posture with
other departments
April 18, 2011© 2010 GBQ Redbank Advisors
“Do not stop your efforts to be the best
operation you can be.”
- Recommendation of leader of OSU’s
performance improvement efforts
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You get what you measure
Focused Scorecard-Services
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PlanF1 Produce cash Cash flow
Facility revenue projectionFlat lot revenue projection
Transportation revenue
Maintenance revenue
customer satisfaction ratings (/10)Email feedback
C3-Anticipate future needs Customer research activity
Accidents
Other incidents
P2-Parking efficiency Parkings/FTE
P3-Ambassador program Patrons assisted
P4-Vehicle maintenance Mean-time-to-repair
P5-On time service Schedule deviation
P6-Reduce non-customer costs Aministration expense
I1-Teach customer care skills % of staff trained
I2- Implement strategic initiatives timely On-time performance
I3-Implement Framework components Initiatives underway/completed
I4-Associates through new program % program completion
I5-Capital projects completed Project due this period
Pro
ce
ss
es
P1-Safety
Le
arn
ing
&
Inn
ov
ati
on
Measure
cu
sto
me
r C1-Customer spend
C2-Increase customer satisfaction
Fin
an
ce
F2 Reduce costs
Temporary labor projection
Full time labor
ObjectiveLeading
Actual
You are the only organization on
campus that is looking back at what it did last
year and measuring progress against that
line in the sand
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18 April 18, 2011© 2010 GBQ Redbank Advisors
Why even try something that might fail?
Do not fear mistakes.
You will know failure.
Continue to reach out.
- Benjamin Franklin
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We learn from our mistakes, not our successes
We can’t take the time to exhaustively desk check everything; only the high stakes activity
Experiment for low stakesBe careful to design
experiments to confirm or disprove our perceptions
© 2010 GBQ Redbank Advisors
Performance problems
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1. Our theory of what works is incorrect
OR
2. Our theory is correct but our execution is incorrect (the scorecard helps here)
© 2010 GBQ Redbank Advisors
Capability Maturity Model
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Limit exposure to the 75% that fail
Go/No Go Milestones
(Phase Gates)
Pace investments,preserve capital
Cheap End Expensive End
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Time
Fee Structure
Item Score
Technical Feasibility 19
Program Impact 20
Reward 11
Strategic Fit 15
Leveragability 11
Overall Score 76
Experiment Investment Portfolio
Housing Issue
Item Score
Technical Feasibility 19
Program Impact 20
Reward 10
Strategic Fit 15
Leveragability 8
Overall Score 72
Registration Idea
Item Score
Technical Feasibility 19
Program Impact 20
Reward 11
Strategic Fit 15
Leveragability 10
Overall Score 75
Parking Solution
Item Score
Technical Feasibility 19
Program Impact 20
Reward 11
Strategic Fit 17
Leveragability 15
Overall Score 82
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26 April 18, 2011© 2010 GBQ Redbank Advisors
It is not the strongest of the species that survives, nor the
most intelligent that survives. It is the one that is
the most adaptable to change
– Charles Darwin*
The Disney approach
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A single initiative
Two final initiatives
Final four candidate ideas
Eight quarter final events
Large initial field told to innovate
Why Innovation of an On-going Operation Pays for Itself
James B. LaneGBQ Redbank Advisors
jlane@gbq.com(614) 361-3679 Cell