Why Innovation of an On-going Operation Pays for Itself April 18, 2011.

Why Innovation of an On-going Operation Pays for ItselfApril 18, 2011

Ground rules

2 April 18, 2011© 2010 GBQ Redbank Advisors

• 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



Who is the customer?

Can you pick out the customer?



http://wiredout.osu.edu/

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


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


What is it worth?

S&P 500 39%

ACSI Stock Portfolio 145%

0% Year 6

ACSI Laggards



What is your value proposition?

Your value proposition

11 April 18, 2011

In the customer’s terms– Financial– Convenience– Information– Speed

Know what par isCustomer’s priority scheme

© 2010 GBQ Redbank Advisors

For wired out

12

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

13

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



You get what you measure

Focused Scorecard-Services


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



Why even try something that might fail?

Do not fear mistakes.

You will know failure.

Continue to reach out.

- Benjamin Franklin


20 April 18, 2011

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


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)


Capability Maturity Model



Limit exposure to the 75% that fail

Go/No Go Milestones

(Phase Gates)

Pace investments,preserve capital

Cheap End Expensive End


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


Program Impact 20

Reward 10

Strategic Fit 15

Leveragability 8

Overall Score 72

Registration Idea

Item Score


Program Impact 20

Reward 11

Strategic Fit 15

Leveragability 10

Overall Score 75

Parking Solution

Item Score


Program Impact 20

Reward 11

Strategic Fit 17

Leveragability 15

Overall Score 82



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

[email protected](614) 361-3679 Cell

mailto:[email protected]

Why Innovation of an On-going Operation Pays for Itself April 18, 2011.

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