Posts Tagged ‘profit’

Collaborating for Results

Thursday, April 22nd, 2010

“Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed it is the only thing that ever has.” – Margaret Mead

Collaboration is a way of energizing people to work and think together. It is the exploration of multiple options from various perspectives. Collaboration is the process of people thinking and working together to discover ways to solve problems; address complex or cross-functional issues; improve processes, products, or systems, or invent new ones. Creative, collective thinking applied to the work we do leads to examination of how we do it, and how we can do it better. This means discovering new ways that are better, simpler, more efficient, or faster.

You will discover many advantages to getting the individual contributor’s thoughts for greater collective thoughts. The benefits are enormous. In the words of Dee Hock, founder and former CEO of Visa USA and Visa International “Given the right circumstances from no more than dreams, determination, and the liberty to try, quite ordinary people consistently do extraordinary things. With collaboration, the whole is not the sum of the parts. The whole is exponentially greater than all of the parts. Individuals join the cooperative effort by pooling their personal resources for superior results. Shared knowledge earns knowledge in return, and pooled knowledge consistently leads to better outcomes. In the information era, sharing information is important because it leads to understanding and keeps you in the loop of what is happening. Sometimes just being in the know opens a wider range of opportunities for action.”

When problems are complex, seemingly insurmountable, or just frustratingly difficult to solve, answers and breakthroughs are more likely to be discovered through a collaboration of diverse capabilities or divergent viewpoints. The process of collaboration can transform conflicting points to common goals. Collaborations provide an abundance of ideas and options in a short period of time.

Searching for new and better ways in today’s morass of possibilities is more than one mind can handle, or at least more than one mind can handle as well in the same time frame. There are countless tasks and complexities that are beyond the capability of one person alone which can be handled by the concentrated efforts of many. There are additional reasons for collaboration. It will help improve production and product quality in shorter time frames while contributing to profitability.

Even contributors who do the same job, but do not ordinarily work together can benefit from sharing tacit information. This is the kind of information that is often not written anywhere, but learned through experience and passed on by word of mouth. The knowledge of how to perform tasks they all do separately can be profitably shared. The result is that each party in this collaboration gains personally from the collective knowledge of the group.

Most often the main obstacles to successful collaboration lie with the collaborators. One of the most common obstacles is a negative or self-serving attitude. Careful consideration must be given to the attitudes of the collaborators. Collaborators need to respect each other for their talents and skills, and they need to focus on outcomes, not personalities. Positive, solution-oriented attitudes should either be part of the selection process or the collaborators’ development process. Training collaborators in conflict resolution and goal setting strategies will also pay rich dividends.

Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses and individuals achieve high levels of excellence and success. Learn how at www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.

Customer Satisfaction Versus Customer Loyalty

Thursday, April 8th, 2010

Peter Drucker said, “The function of business is to attract and maintain customers.”

Based on our experience with all types of organizations including traditional businesses as well as non-profits, we would add in order to make a profit or to be financially viable or best serve their community. Therefore, if the reason for organizations to be in business centers on their customers or the community they serve, as your organization’s leadership team, managing and measuring your customer interface becomes one of your most important functions.

Making certain that your customers get what they want and come back for more is of critical importance to the long-term success of any organization. All factors that impact negatively on the customer must be identified and corrected if you wish to compete effectively and profitably now and in the future. To a successful business, customers are the most important ingredients, and it is quite challenging to conduct a business without them. Your organization’s leadership team has several critical functions as it relates to your customers. The leadership team must develop appropriate customer-oriented strategies, design and implement customer-friendly policies/processes, develop your employees as it relates to creating and sustaining customer relationships, and constantly monitor and continuously improve your progress on the issues that are defined as most important to your customers. What does your organization do to attract customers, and what are the costs associated with attracting and maintaining loyal customers?

There are two measurements that will help you understand and manage your customer relationships: customer satisfaction and customer loyalty. Currently, it seems the majority of leadership teams are focusing on customer satisfaction to determine their customer service measurements, therefore their level of success. This measurement is flawed and often falls short of actionable expectations. Satisfaction surveys are unable to predict customer behaviors because they are built on faulty foundations. Many organizations assume that high levels of satisfaction translate into customer loyalty when, in fact, customer satisfaction ratings are more closely linked to your customers’ perceptions of your products or services. Satisfaction is a measurement of, “I expected it and got it.” therefore, “I’m satisfied.” If this were translated into any grading system, satisfaction could easily translate into a grade of “C” on any report card. The desired score is obviously an “A” and A’s always equate to loyal customers. A’s imply that customers got more than they expected and their expectations were exceeded in some way. Based on what is truly important to customers, they received more value from you than from your competitors. Which measurement does your organization use?

Why do you want loyal customers? Often, the challenge that organizations face is one of focus. Ancient civilizations viewed our earth as the center of the universe—they believed everything rotated around us. Today, most executives focus on profitability as the most important factor to the survival of business. Is it possible that modern business theories like ancient natural science theories are built around an equally false center? The notion that there is no linkage between customer retention and profitability is being proven false. Recent studies that sought to find linkage between customer retention and profits have supported the fact that the old notion is indeed false. There is a direct linkage between customer retention and profitability.

Checkout future blog posts on how customers define perceived value.

Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in business and management consulting, strategic planning, leadership development, executive coaching, and youth leadership. For more information visit www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.