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The arguments in favor of developing a team approach to customer facing functions are compelling, but saying it one thing, doing it quite another; the magnitude of the change may seem daunting. Heeding the ancient Chinese proverb, we know that “even a journey of a thousand miles, starts with a single step,” meaning that there is no need to attempt a total organizational transformation in one go, if an evolutionary approach makes more sense.
In this article we discuss ideas to get started, from the initial mindset, to the formation of the first circle, to the interfaces created with the existing, traditionally managed parts of organization. We further discuss the benefits of initiating the improvement process seen from the customers perspective – when an organization starts taking the fundamental approach of Agility and Lean Thinking.
If you are reading this article, you are at least part way to adopting a mindset consistent with the Values and Principles of Agile Customer Circles (ACC). Many organizations claim to be customer-centric, but what does that really mean? For us, it means starting with the customer and aligning and designing an organization primarily for the purpose of learning what value means to the customer; understanding his requirements and striving to meet or exceed expectations.
It means changing the way you interact with the customer and changing the way each discipline within your own organization collaborates to serve the customer and build strong and sustainable relationships that produce better outcomes for all stakeholders (customers, investors, employees, suppliers). At the heart of Agility is the constant feed-back loop at work in the customer interaction, feeding every part of the product Value Stream, not just the traditional sales function.
Removing the adversarial element
The customer-supplier relationship is adversarial to the extent that each side is battling to see who comes out on top. The system which incentivizes sales people is designed to reward hard work, but it also leads to over-selling, sometimes with terrible consequences. But does it have to be that way?
The aim here is not to dampen creativity or curb enthusiasm, but to develop a customer-supplier relationship that is based on a sounder footing and which will endure, because there is mutual trust and each side benefits from the other’s success.
Push and pull principles, each have strengths and weaknesses, but instead of one or the other, what about using both? The idea of combining input from the customer with that of the supplier is implicit in the “feedback, feedforward loop” which is at the heart of Agile Customer Circles. It is a system that treats the customer as a partner, not an adversary and leads to more sustainable customer relationships, because the supplier knows what the customer wants and over time, can develop an organization that consistently delivers products and services that meet requirements and generate optimal value.
Push and pull-principles of customer engagement
Persuading customers that a product will benefit them is a complex process; the standard sales approach is to stress the positives and minimize its negatives. If the customer sees enough positives vis-à-vis the competition and budget, they buy the product – this is the push principle because the main messaging is pushed to the customer from the supplier.
To be heard above the clamor, suppliers often make exorbitant claims and to compensate customers often discount the supplier’s rhetoric as too good to be true – which it usually is. The old adage “how do you know when a salesman is lying?” “his lips are moving” is a cliche, but clearly a big weakness in sales and marketing is that suppliers often distort the truth and customers either discount the message, or accept potentially dangerous consequences.
The process is not only arguably dishonest, it is very wasteful and destructive. Suppliers spend money and resources spinning messages, while customers have to unravel the spin, only to end up buying something that is a compromise or doesn’t meet expectations.
While the push-principle is flawed, the pull-principle is also challenged because ceding initiative to the customer leaves a lot to chance and may not account for emerging innovations and developments of which the customer is unaware. As Henry Ford talking about the model T put it: “if I only delivered what the customers wanted, they would have had a faster horse!”.
Feedback feedforward loop
By contrast and central to Agile Customer Circle operation is the Feedback, Feedforward Loop which engages the customer on a deeper, multi-dimensional level, producing a clearer picture of requirements for creating value within the customer-supplier ecosystem. Feedforward in this context means the proposals, innovations and hypotheses the Supplier brings to the collaboration; Feedback is the Customer’s response to the collaboration.This Information, circulates within the Agile Customer Circle, which has the power and flexibility to align its activities to respond effectively. The cycle persists in perpetuity creating a tighter bond with the customer and optimal value generation through a process of constant learning and radical improvement through collaboration and transparency.
Rules of engagement
I was actually in a meeting once with a customer and a supplier sales rep who said with a straight face “that was then, this is now” when asked about the terms under which they were supplying services to the customer. Naturally the customer was appalled that the supplier had changed the rules of engagement without consent. This cannot and must not happen when working with ACCs.
In order to establish trust, it is critical that all rules of engagement, not just between customer and supplier but also between members of the supplier ACC, are clearly understood, consented to and not changed without formal agreement between the parties. Keeping commitments is central to any building of trust.
In ACCs the rules of engagement are established in the “Artifacts” that define, among other things, expectations, commitments, specific deliverables where applicable, how the parties work together. It is however important to stress that when dealing with complex matters not everything can be written as a legal contract; we have to accept that a mutual and common understanding is reached through dialog.
Taking the first step
In small organizations, co-workers often collaborate closely in something that may already approximate an ACC. But, larger establishments are often divided into product or geographical groups and sometimes both. Existing divisions like this present the first opportunity for creating an ACC.
An organization’s first ACC could be a small team of up to nine people that focus on a customer or set of customers with something in common, e.g. they are in the same region or all buy the same product or service. It may help to choose a sector that is underperforming to maximise the potential for early pay-back. It is also a good idea to choose a sector that has some visibility inside the company.
It is not uncommon to ask existing employees to volunteer to be Circle members, in fact it is recommended. Those that do, often come to the initiative with a healthy attitude to change and desire for improvement of both general outcomes and their own skills. When people volunteer to participate, they normally also volunteer their knowledge, passion and general common sense.
How are ACCs different?
Focus on customer requirements
Many organizations claim to be customer-centric, but what does that actually mean? ACC’s demonstrate their commitment to the customer in three basic ways. First, the “Feedback, Feedforward Loop” includes the customer in the process of product development and delivery. Secondly, the ACC’s Strategic Officer is a permanent role, responsible for understanding, defining and communicating customer requirements as they develop and evolve over time. Finally, the team itself is committed to reacting to customer requirements by adapting its operations to meet them.
Help, do not exploit the customer
ACC’s aim for collaborative and trusting relationships with their customers, treating them as partners, not adversaries or targets for exploitation.
In traditional organizations, management structures are designed to break down the overall mission into separate departments that communicate laterally only at the senior level and top to bottom within their own ranks. Teams in this sense are groups of people all with similar skills that operate within the walls of single discipline silos.
In contrast, ACCs are cross-functional and self-organizing, designed to have all the skills necessary within the team to fulfill customer requirements. They have a common mission to which they all contribute and agree, so they are always on the same page and never have to wait for authority or other departments to act.
They are collectively responsible to the customer, accountable to each other and committed to radical improvement through collaboration and transparency.
Team members are engaged, empowered and encouraged to develop new skills, resulting in a greater pride of workmanship in the collective endeavors.
The Circle and Team
The first appointment
The first appointment to the ACC should be the Strategic Officer (SO) sometimes called the Product Owner (PO). This role has the prime responsibility for optimizing value in the Circle and defines the initial strategic aims of the initiative including prioritizing how to create value for all stakeholders. This role deals with a moving target because customer requirements change all the time, but the SO’s challenge is to keep pace with this evolution and to help convey this information to the Circle and often facilitate direct contact between Circle members and customers.
Having established the responsibility for the strategic aims, the Circle Team is created for the purpose of tactically meeting those expectations. The Circle Team is ideally a discrete entity and self-managing, so it should contain full-time members with all the skills needed to produce the expected deliverables. This often means that Circle Team members are from different disciplines and it would not be unusual to find sales, marketing, customer support, finance, product development, Q&A and logistic skills all in the same Circle because they all have a role in meeting customer requirements. These people have the responsibility for the tactical execution of serving the customer.
Last but not least
In ACCs we talk about joint leadership. The first leader is the SO and the counterpart is the Operations Officer (OO), sometimes called the Scrum Master. These two work together to manage the Circle, with OO focusing on operational matters, such making sure that Circle Team members have what they need, helping to solve problems and generally trying to remove all obstacles and impediments that impair progress and prevent on time delivery of customer deliverables. The OO has the operational responsibility and is always focusing on optimizing the Circle’s way of working. The OO is a servant leader always preparing the soil for the Circle to grow to its maximum potential, not the chess master moving pieces around.
What does the customer experience?
Like anything new, until the benefits become apparent, not everyone will take to the idea of the ACC and in fact, not every organization is a good candidate at first. But, while each organization is unique, they all have factors in common, such as the need for sustainable customer relationships, profitable business and happy stakeholders. Which is the driving force behind the ACC.
Customer engagement starts with an audit of how the supplier company and product is perceived by the customer and how that overlays an audit of customer requirements. The process then evolves with the supplier creating a prioritized and estimated backlog of requirements which it has committed to deliver. A roadmap is created which can be made visible to the customer if desired. This creates a bond between the parties and the starting point for feedback-feedforward communication.
Specs are not the same as requirements
As a side-bar it should be noted that while a spec is a static definition of a product, it is not the same as requirements which often are dynamic and change with external circumstances. The Strategic Officer must understand how the specs and requirements interplay and this must be conveyed to both the customer and the team, particularly when it affects delivery and cost expectations.
How does the feedback loop work in practice?
Even loops have to start somewhere and because each customer-supplier situation is different, the trigger points will also vary. However, as the point of this is radical improvement through collaboration and transparency, we have to know where we are starting from and where we intend to go. We refer to this as the PDSA loop.
Therefore, the initial phase is to make an objective assessment of customer requirements and align that with a similarly dispassionate assessment of the supplier’s initial response.
From this we create a backlog and roadmap which is divided into iterations with specific deliverables. The first circuits of the loop involve the prioritizing, estimating and planning the iteration, sharing that with the customer for refinement as necessary. The loop continues through each phase of the Road Map.
We can interface Agile Customer Circles to other traditionally managed parts of the organization. We call such interface definitionsRelationship Manifests. In its simplest form this is a series of statements and commitments which define the relationship between both parts.
Before we can do this the ACC needs to have its own Manifest, which might include:
- The mission of the ACC
- How it fits into the whole organization
- What it needs from the organization
- The ACC member and skills, perhaps a competency matrix
- What and when the ACC delivers
- How it communicates with the rest of the organization
Then for every part of the organization with which the ACC collaborates, we create the public statements and agreements called Relationship Manifests, they have of course to be consistent with the ACC’s own Manifest. They describe how, what and when each part the organization works together. In this way everybody is informed and confusion and frustration minimized.
In much the same way the reporting structure from an ACC to a traditional management system can be established. Management will have to relinquish some of their existing patterns of reporting in order to give the ACC the mandate to operate fairly autonomously, otherwise failure is almost guaranteed.
The ACC starts operating and in usual Agile and Lean fashion, works in cadences with feedback and learning, constantly improving and making its progress visible to the rest of the organization.
If and when this goes well, it is most likely that other parts of the organization sees the benefits of this way of working. It may be one group dealing with another customer segment or a group operating behind the scenes supplying parts of the whole solution to the ACC.
It is good practice to seed such new mini-transitions with people from the original ACC to transfer experience in the most effective way.
Change can be uncomfortable, particularly when the pressure is on because continuing in the current vein is simply not working. For those that perceive Agile Customer Circles as part of a solution, the decision should not be overwhelmed by fear of taking on a risky, mammoth task.
Introducing ACCs, or any other Business Agility project can be accomplished one step at a time as described here, by carving out a specific opportunity and creating interfaces with the rest of the organization until they are ready to be part of the transformation. Many organizations rightfully fear the risk of upending the organization and doing things differently. The way we have described it, it can be done in an incremental way, thus reducing risk, learning on the way and gradually getting people’s acceptance and even enthusiasm. We are looking for the evolutionary potential in the present.
Help is also not far away. At Agile Lean House we have the skills, experience and tools to coach you on your journey to a more sustainable customer relationship that creates value for all stakeholders in the enterprise.
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