We live now in the age of customer capitalism.[1] The era of shareholder capitalism, i.e. pushing products and services at customers, of tweaking the supply chain, of parsing and manufacturing demand, with the single-minded goal of making money of shareholders, is over.
As a result of epochal shift of power in the marketplace from seller to buyer, the customer is now in charge. Making money and corporate survival now depend not merely on satisfying customers but delighting them. To prosper, firms must offer a continuing supply of new value and deliver it sooner. The new bottom line of business is: is the customer delighted? As Umair Haque has pointed out in The New Capitalist Manifesto, it’s a fundamental shift from outputs to outcomes.
Measuring outcomes: customer delight
It’s not enough just to talk about delighting customers and shifting from outputs to outcomes. To manage the new bottom line of business, we have to measure it. Thus traditional management was right to insist on the importance of measurement. The trouble was that they were measuring the wrong things. They were measuring outputs, rather than outcomes. By counting outputs, i.e. things, they were missing what is really driving the business, the outcomes with customers. Measuring the right thing, i.e. people based-results or outcomes, requires four fundamental shifts:
- Part 1: Measuring customer delight at the organizational level (see previous post)
- Part 2: Measuring customer delight at the working level: (today)
I will discuss in later posts two further necessary shifts in measurement practice:
- Part 3: Measuring a key aspect of customer delight: time
- Part 4: Tracking progress in enhancing customer delight
Part 2: Measuring customer delight at the working level
The organization can only consistently delight its customers if each individual work team is focused on that goal. This is not just the work of the CEO or the marketing department: it’s the job of everyone in the organization. That means that each team's work goals must be spelled out in terms of client outcomes, not merely outputs from within the firm.
An intelligent measurement system requires that the results of the firm’s work are measured in a way that ensures that outputs are only counted as positive progress if they succeed in delighting customers. Equally, an intelligent measurement system must be able to register that outputs which irritate or disgust the customer are failures. They are negative events for the firm because they undermine its capacity to survive.
The shift from outputs to outcomes: user stories
How do we make this shift? In practical terms, the real revolution in management practice comes when the firm starts defining the goals of work in the form of user stories. This is the Rubicon where a firm crosses from traditional to radical management.
Once the goal of each work team shifts to that of delighting clients, the definition of work moves from an abstract adding up of "things delivered" to an understanding of "the quality of the customer experience". The questions become: What is going on in the world of the customers? What is their current experience like? How could that experience be different as a result of what we can accomplish during a cycle of work? What can do that would eliminate irritation or enhance delight?
Capturing these elements takes the form of a user story. Stories catalyze our understanding by providing direct access to other people’s actions, thoughts and feelings. They enable us to climb out of our own self-centered world and see things from someone else’s perspective. With that understanding, we can begin to imagine what kind of a product or service will be likely to delight them.
Fortunately, there is a whole body of expertise and more than a decade of experience in thousands of organizations in deploying user stories to capture work goals. The methodology is explained in detail in Mike Cohn’s classic book, User Stories Applied
In workplaces that have made the transition, the workplace feels different: it common to hear people talk in terms of implementing stories: “I implemented three stories in this work cycle.”
Mike Cohn describes the standard form for the user story:
As a <type of user>, I want <some goal> so that <some reason>.
Putting the story in the first person is important, because it draws the team into imagining the client’s situation. By saying, “As a such-and-such, I want. . . ,” one instantly imagines what it is like to be a such-and-such.
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Examples of User Stories |
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As a (Type of User) |
I Want (Goal) |
So That (Reason) |
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As a parent, |
I want a comfortable, affordable home |
So that my spouse and I can raise our family. |
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As the U.S. Congress, which funds the nation’s defense systems, |
We want a missile-launching submarine built in a timely fashion |
So that we can be assured that that the country is safe from nuclear attack. |
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As the client of a boutique hotel, |
I want a comfortable room with a personal feel to it |
So that I have an unexpectedly stimulating night away from home. |
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As the holder of a house insurance policy, |
I want to know that the major risks to my family home are covered in case there is an unexpected catastrophe |
So that I will not be financially destroyed by the catastrophe. |
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As the user of a job search Web site, |
I want to be able to find and apply for jobs that might interest me |
So that I can find a better position than I currently have. |
The user story is the beginning of a conversation
If a user story is dropped into a traditional management setting, the likelihood is either that it will be instantly rejected (because it is a story) or that it will become an artifact, an instruction, a new abstract plan to be imposed on the team. It will be seen as a top-down, one-way communication. One part of the organization defines the requirement, and a different part implements it. Through the written document, the manager is giving an instruction, “Here’s what to do,” and the team is expected to do it without asking questions.
This type of boss-subordinate relationship with one-way communications is incompatible with delighting customers. That’s because it undermines the commitment on the part of those doing the work to delighting customers, particularly where the workers are at least as knowledgeable as the boss. Rather than feeling responsible for the success of the product or contributing new ways to delight the client, they will focus on what they have been told to do.
Open-minded conversations have the opposite effect: the opportunity for everyone to participate elicits new insights and inspiration to contribute to the complex goal of delighting the client.
User stories are a way of shifting the focus from pre-determined abstract requirements to towards discussing what might delight the client. A user story is a short, simple description of a need told from the perspective of someone who wants the product or capability. The written version of the user story is less important than the conversations surrounding the story. It enables the people doing the work to get inside the mind of clients and focus on what might delight them.
Keep the user stories simple
Traditional managers visiting Toyota factories are often startled by the simple handwritten documents on which progress is recorded and lessons are learned and shared on single sheets of paper.
Similarly, in workplaces where user stories are deployed, visitors are often surprised to find that instead of planning being done with sophisticated computer programs, user stories are typically displayed on handwritten cards or sticky notes and prominently displayed in the workplace itself.
Why this preference for handwritten paper notes ahead of computers? Computers are wonderful things, but when information is stored on a computer, it is available only when it is actually accessed and then usually only one person at a time. Moreover once the information is in the computer, it tends to become a formal, fixed artifact, with all the risk of generating magical thinking that the plan is reality. Having handwritten notes, cards, and charts that are visible to all in the workplace and adjusted as necessary can be a constant reminder of the fluid nature of reality.
Make the user stories visible
Using a lightweight, temporary form of recording like cards or sticky notes also serves as a constant reminder that the written version of the story is a starting point for a conversation, not the final word.
Displaying the user stories in the workplace showing what is being worked on, what has been completed, and what remains to be done in the iteration is also important. Everyone can see at a glance where a project stands. The board on which stories are recorded becomes an information radiator.
Making measurement matter
It’s not enough to measure what matters. We have to make measurement matter.
Deploying user stories to formulate work goals is thus more than just about adding a new tool set to existing managerial toolkit. Indeed, if that’s all it is, and management continues to pay primary attention to the data generated by tools that count outputs, then nothing has been accomplished by tracking outcomes. In fact, the firm’s situation is worse than before: the management has added the cost of collecting additional data, while gaining no benefit from doing so.
The transformation occurs, and the huge benefits come, when the management deploys user stories as the primary measure of progress of the work, ahead of outputs. Outputs are mere interim checkpoints. The questions what of really matters to an organization are: Did the work accomplished during the cycle make the user story come true? Was the customer delighted by the experience? If not, why not? If yes, how can do we more of that?
The shift from traditional management to radical management is thus more than adding tools to measure people-centered outcomes. It’s about individual managers achieving a fundamental change in thought, attitudes and behavior so that they treat outcomes as more important than outputs.
Mike Cottmeyer has written in the same vein in his article about the two dimensions of an agile transformation:
- Organizational transformation – Making changes and adding tools to the organization in a way that aligns teams and technology with the value creating capabilities of the business.
- Personal transformation – Realigning personal value systems to reflect a more agile world view, including things like servant leadership, responsibility, empowerment, emergence, uncertainty, and respect for people.
Adding the tools by itself does nothing unless there is also a personal transformation so as to make measurement matter.
Coming next:
Part 3: Measuring a key aspect of client delight: time
To learn more
If you would like to learn more about implementing the shift from outputs to outcomes and measuring client delight, please join me for two days on May 12-13, 2011 in Washington DC in a workshop on "revolutionizing the world of work." It's all about cool, innovative and serious fun. More details here.
[1] Roger Martin wrote about the shift from shareholder capitalism to customer capitalism in his classic HBR article Martin, R. “The Age of Customer Capitalism.” Harvard Business Review, Jan. 2010, pp. 58–65. It is also reflected in The New Capitalist Manifesto by Umair Haque, The Power of Pull by John Hagel, John Seely Brown and Lang Davison, Reorganize for Resilience by Professor Ranjay Gulati and my own book, The Leader’s Guide to Radical Management (Jossey-Bass 2010).
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Posted by: Health News | March 16, 2011 at 03:49 AM