HOW TO ADAPT IN AN ERA OF RAPID CHANGE

HOW TO ADAPT IN AN ERA OF RAPID CHANGEExploring Drivers Influencing the Way Businesses Approach OPEX

3 INTRODUCTION

4 CUSTOMER

6 INNOVATION

9 TECHNOLOGY

CONTENTS

3

INTRODUCTION The company of today knows where it wants to go. It wants to be more agile, provide the best customer experience, improve quality and build value. But despite these desires, many companies fall short of these goals. Whether it’s because of one-off initiatives rather than company wide endorsements, programs that aren’t sustainable, the common theme is a lack of a radical overhaul in operational process excellence.

In this report we explore three main drivers that are influencing the way businesses approach operational process excellence; customer, innovation and technology.

INTRODUCTION

Putting the customer at the heart of the process design and delivery has become a key priority for OPEX professionals. The concept of value for customer has become the centre of business improvement as companies focus on their competitive advantage.

CUSTOMERCUSTOMER

4

Digitalisation has increased the customer demand upon businesses and this will only continue to grow. Customers expect to be able to communicate with businesses through a wide range of channels not just the physical locations. What large companies struggle with is bridging the gap between connecting fact-based customer journey analysis to operational efficiency.

Done right, organisations with the capacity to harness customer journey optimisation strategies understand the potential for significant cost savings and increased customer satisfaction.

To do this however, requires a new level of operational planning that includes more robust and effective processes and technology which we will be exploring further in this report.

Before we do, it’s important to note that ensuring customer-centricity in operational excellence can only be achieved through effective leadership and culture change. This is why in a recent survey conducted by the PEX network, over 43% of respondents cited leading from the top down as the most effective strategy to develop a customer-centric process. Definitely invest and get excited by innovation and technology but don’t forget what’s at the core of transformational change; people.

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CUSTOMER-CENTRICITY AT THE HEART OF INNOVATION AND TECHNOLOGY

INNOVATIONSome practitioners have argued that continuous improvement needs to go beyond Lean Thinking and Six Sigma to generate new areas for innovation. However according to a survey conducted by the PEX network 85% of respondents declared them still very relevant. Yet while they remain relevant many OPEX professionals are building upon their techniques to improve operational excellence.

INNOVATION

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Analysts from Gartner and McKinsey are suggesting business operating models that could be the future for success.

A Gartner report ‘How a Business Operating System Can Guide CIOs to Digital Business Success’ predicts that those organisations that do use a business operating system will turn the 70% failure rate of transformation into a 70% success rate. Gartner is also discussing applying the concept of a Digital Twin to business. The Digital Twins are the digital representation of physical things. Gartner says they are becoming a disruptive trend and ‘predicts that by 2021, half of large industrial companies will use digital twins, resulting in those organisations gaining a 10% improvement in effectiveness.’ On a business operating level it says ‘a digital twin of an organisation is a dynamic software model of any organisation that relies on operational and / or other data to understand how an organisation operationalizes its business model, connects with its current state, responds to change, deploys resources and delivers expected customer value.’

All aspects of the digital twin are meant to help with decision making processes. By creating a virtual copy of the business, leaders can play around with scenarios, ideas and options before high risk execution.

McKinsey’s Next Generation Operating Model is “a new way of running the organisation that combines digital technologies and operations capabilities in an integrated, well sequenced way to achieve step-change improvements in revenue, customer experience and cost.”

The model adopts two parts that require companies to make radical changes. The first is a shift from uncoordinated processes in silos to an integrated operational-improvement program centred around customer journeys and internal journeys. The second is a shift from using technologies and operation capabilities in a fragmentary way within silos to applying them to journeys in combination.

NEW BUSINESS MODELS

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DESIGN THINKING

Design Thinking is a great way of improving operational excellence and move an organisation towards customer centricity. Julee (Hyunju Lee), Chief Design Officer and Design Thinking Facilitator at UXStudio (www.uxstudio.co), explains that even though it is in the title, ‘Design Thinking’ is not just thinking because ‘thinking’ doesn’t deliver action. Design thinking is “actually doing and practicing” and is a “practical methodology to learn problem solving skills.” It is about innovating through design-led thinking and doing with both product and experience in mind.

“Innovation is a dynamic, evolutionary action that lies in your team’s constant efforts, and numerous iterations for improving the experiences of your products and services. I call these Evolutionary Innovations, which are brought about by many incremental advances” explains Julee. “For example, the user experience of listening to music has evolved drastically over the years yet the core of the product is ostensibly the same - a device / mechanism to stream the music so I can enjoy listening. The experience has evolved in the response to the constant change in the product/service’s users desires, business needs, and technology feasibility.”

Design Thinking focuses on customer empathy. It uses various design and research methods to dig deeper on human behaviours, needs and motivations. Customer

home visits, and contextual inquiries (one on one in-depth interviews) are used among the methods to bring the utmost empathy - it focuses on WHAT customers say and do, HOW customers feel and think, and WHY customers’ motivations and needs. After gathering those facts, emotions, and behaviour and needs, a design thinking practitioner can analyse and synthesise.

The benefits of embracing Design Thinking as a culture, says Julee, are huge. It builds and transforms organisations into a positive culture.

It pushes employees to go back to basics, where the customer is number one. Building a design culture means developing a culture of customer empathy. Design thinking also transforms an organisation into a collaborative one. Design thinking groups are multidisciplinary professionals, from sales to product managers, collaborating in a meaningful way.

There are many examples of organisations taking on a design culture says Julee; Google created a design method called ‘Design Sprint.’ a five-phase framework of problem solving process through rapid prototyping and user testing. Airbnb uses Design Thinking to their projects actively, the process created by Standford d.school.

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TECHNOLOGY

From the AI and IA Network Podcast we bring you two case studies on the impact of automation into the operational process excellence mix.

TECHNOLOGY

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From the OPEX Summit in San Diego, Cyndi Creamer shared what she’s doing in Business Transformation on the Robotics team for Swiss Re:

‘I’m responsible for getting the pilots off the ground. Making sure the ideas are valid, checking the validity and starting the charter, preparing the artefacts and most importantly I’m responsible for implementing them.

People want their lives to be easier and automation can help that. In my experience it’s the people on the floor that embrace automation. They want to be doing other things and for automation to take these jobs off their hands. People want to add value; the robotics can take care of the day to day processes.

The challenge with robotics is to choose the right processes. In the beginning we took a grassroots approach. People came to us and said this process is terrible we need to automate it. Now we take a more structured approach to determine what needs automating. We create a heat map, discussing pain points and the maturity of the process. We also have a decision tree which this all goes through. By adopting a more structured approach we can identify the ideal candidates to improve the business. The grassroots process worked well in the beginning but now we know enough to have the confidence to say which process needs help.

Our first two pilots were completed around the same time.

Once you have a pilot out and running, it sells itself in regard to buy-in; everyone can see the advantages of having this process automated. The first pilot, Neil, named after Neil Armstrong because he is one small step for finance and one giant leap for Swiss Re, is a bank reconciliation robot. It used to take four people a week or two to do all the city bank reconciliations and now Neil does it in three days. This frees up so much capacity. The second one is Victoria, she is able to take data and compare it against our claims system and validate it. If it’s all correct she can book reserves to the ledger.

The lessons learned so far:

• It’s imperative to have the subject matter experts available when you need them. They know the process better than anyone and if we don’t have them at the critical moments then the project takes longer and the process won’t be automated correctly.

• People can overestimate the maturity of a process. At first glance on a high level it looks like a good process to automate but for robotics you need to evaluate the granular level. Sometimes that granularity is not there so it delays the process.

• One of the key lessons in business transformation is that what works today may not work tomorrow and you have to accept that. You can try a process and then realise that its not sustainable and you have to go a different way.”

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DETERMINING THE RIGHT PROCESSES TO AUTOMATE

Talking in London at the RPA and AI Week 20t17, Bart van de Sande the Head of Operations Transaction Banking for ABN Amro, believes RPA and AI are all just part of transformation. Bart notes that these are all new tools on the transformation journey, just as lean management and all of the tools before and after.

‘I think people can get caught up in the technology. It’s important to implement them but I believe these techniques are only new tools to work with. Always at the core is the question, do you love your clients? Do you have patience for your clients? Do you want to go the extra mile and do you know what drives them? How are you going to help them fulfil their dreams? And maybe in the financial sector, how are you going to help them get out of their worst nightmares? This should be at the core of transformation and digital transformation.

We have some really great things we can do with RPA and AI but it starts with your people and being passionate about your clients. If you work in the financial sector, or are with Google, or an airport, wherever you are, you should love your clients and know what drives them.

Customers in the past used to be more dependant on their banks but behaviour has changed. They’re more critical. Companies like Amazon have disrupted the marketplace where you can order at 11pm and the day after it’s on your

doormat. Confidence has also dropped after the financial crisis. Now we have to work hard to regain the confidence of our clients. The competition might not be coming from other banks, it will come from new Fintech players or perhaps companies like Apple and Google.

This brings us to automation. We have to work harder and smarter and that includes new age technologies. We like to take a holistic view on this because as well as RPA and AI there are other instruments like process mining, data analytics and RDA. We are very client focused, client-centric and talk about our clients rather than the bank. We use these tools to help us with the best solutions for our clients. We look at the client journey, the pain of the client, what tool is needed and what is the best tool for the job? There’s not just one tool or one set. It’s a mindset that’s important.

With the example of RPA we have 40 robots live on 40 huge client processes. Within those processes 90% of all the repetitive handheld tasks are removed by the robots. It is a cost perspective but also an important risk perspective. Less mistakes and much faster which is beneficiary for the client.’

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TOOLS FOR THE JOURNEY

If you are interested in learning more about operational excellence approaches, the OPEX Week Summit 2018 will feature Asia’s top OPEX leaders on topics ranging from digitising business process, RPA, design thinking, customer-centric process innovation to big data optimisation. We are experiencing an era of rapid change but it is also an exciting one with so much innovation at our fingertips to pursue the next phase of corporate growth.

DEVELOPING CUSTOMER-CENTRIC BUSINESS AGILITY THROUGH PROCESS INNOVATION AND DIGITISATIONPEXASIA.IQPC.SG

SOURCES

Customer Journey Optimisation, mavim

Prepare for the Impact of the Digital Twins, Gartner

12 Powerful Use Cases for Creating a Digital Twin of your Organisation, Gartner

The Next Generation Operating Model for the Digital World, McKinsey

AI and IA Network Podcast

Operational Process Excellence is moving fast. We are forever adapting in an era of rapid change. While methods such as Lean Thinking and Six Sigma are still relevant, businesses need to further explore innovative ways of creating radical overhaul in their processes. In the age of the customer it’s also important to bring customer-centricity into every operating model.

24 - 25 APRIL 2018

Technology is changing fast too with exciting capabilities. Yet with it comes the need to evaluate and analyse which tools are right for the job. To remember that they are just tools to help on the transformation journey. It’s a thrilling time as organisations focus on the next phase of corporate growth. Let us learn, share and grow together.