ROUNDMAP_RoundTable_2000_shutterstock_1120985537

© 2014-2019 Edwin Korver, CEO – CROSS SILO BV – all rights reserved – MOBILE +31-(0)6-52341111
Registered at BOIP.INT i-DEPOT 094029 (3.0), 095482 (3.1), 103610 (3.2), 105496 (3.3), 106619 (3.4), 110465 (3.5), 115384 (3.6)

DRIVING CUSTOMER EXCELLENCE

ROUNDMAP™ is a framework to achieve, or even exceed a firm’s desired commercial outcome ─ by empowering frontline employees to engage customers with poise, compassion, and purpose to collect and democratize customer insights with which to drive the delivery of significant value.

ROUNDMAP™ is a creation of Edwin Korver, CEO of CROSS-SILO CUSTOMER INTELLIGENCE

To be successful, a company needs to build a culture of trust, honesty, transparency, consistency, commitment, and accountability, while ensuring effective communication between separate teams and departments, in order to deliver personalized customer experiences that forge strong customer bonds.

However, today’s business enterprises are exceedingly fragmented due to the distribution of tasks, causing mental and organizational silos leading to tunnel vision, internal competition, and in some cases even turf wars.

These negative effects tend to obstruct the delivery of value, ultimately deteriorating commercial performance, leaving the firm’s revenue and profit short of the desired outcome.

Our mission is to support firms to achieve their desired outcomes and help them grow beyond their expectations.

INTEGRATIVE APPROACH

Our method, based on the ROUNDMAP™, aims to repair the broken value chains by crossing functional silos. We’re convinced that the employee-customer interaction is the Ultimate Level of Truth™. This is where new opportunities emerge and threaths can be identified quickly. When combined with a common sense of purpose and the right business model, our integrative approach could lead to a substantially better performance (up to 765%; Kotter and Heskett, 2011).

While ROUNDMAP™ focuses on value delivery and frontline performance optimization, other frameworks are generally cost-oriented. To increase operating income both aspects -cost and performance- should be considered.

ENHANCE YOUR PERFORMANCE

What to expect in terms of commercial outcomes from adopting the integrated approach of the ROUNDMAP™ Framework for Customer Excellence?

Although the effects of the deployment of the ROUNDMAP™ methodology will depend on the specific circumstances, the authors of HumanSigma suggest that increased engagement, which is one of the goals of the ROUNDMAP, will produce results ‘that far exceed companies’ expectations’. Kotter & Heskett’s extensive research on the effects of culture on performance even showed a 765% net income improvement over 11 years (~22% YoY-growth, between 1977-1988).

+300%
Towers Watson, 2011

"More Engaged Employees"

+340%
Gallup, 2008

"More Engaged Employees and more Engaged Customers"

+765%
Kotter & Heskett, 2011

"More Collaborative and a less Adversarial Culture"

You may have noticed that these impressive growth numbers aren’t the result of better marketing, sales, or customer service, rather from a culture in which employees are given the opportunity, skills, systems, and trust to be able to commit themselves to offer customers the value they deserve and take full responsibility for it. We call this customer excellence.

PREREQUISITES

While the ROUNDMAP™ is the go-to framework for maximizing the performance of value delivery and the customer development process, it does require certain prerequisites. To create the appropriate conditions the ROUNDMAP™ integrative framework offers an effective approach allowing the firm to transcend past performances.

No one knows the cost of a defective product - don't tell me you do. You know the cost of replacing it, but not the cost of a dissatisfied customer.

W. Edwards Deming

THE DRAWBACK OF SPECIALIZATION

To understand the difference between an integrated and a fragmented operation, we’ll need to explain the concepts of the division of labor and specialization, which began in the past century.

The division of labor is one of the hallmarks of capitalism. Prior to Henry Ford’s advancement of the assembly line for automobile production, cars were primarily produced by craftsmen or artisans. Every member on the team had a very good working knowledge of virtually all aspects of car manufacturing. With the assembly line, a small team of people designed the car and assembly process, while a larger team of unskilled workers built the cars.

Consequently, the Industrial Revolution brought specialization from the division of labor, by standardizing and allocating work, which brought increased productivity. This specialization, however, decreased self-sufficiency and people became increasingly interdependent on one another, leading to fragmented structures (silos), a limited sense of responsibility and a narrow scope of awareness.

SCIENTIFIC APPROACH

To illustrate the underlying scientific management approach, often attributed to Frederick Windsor Taylor, we’ve created the following figure of the compartmentalized product assembly line:

INDUSTRIAL EFFICIENCY

While Taylor sought to optimize industrial efficiency, ultimately leading to robots replacing much of human labor, few will realize that a similar scientific management approach to increase employee productivity has also been applied to today’s customer development processes.

To illustrate this, we’ve created a schematic illustration of the customer creation line (process):

FRONTLINE PRODUCTIVITY

Are you confused to see how customers are passing by stationary frontline employees, on an imaginary conveyor belt, similar to how products, like cars, passed stationary factory workers for over a century?

This is in fact how most creative processes are organized today. And it should come at no surprise that this approach leads to employee disengagement, in the same way to how industrial compartmentalization led to disengaged factory workers.

Margaret Heffernan: “The problem is that efficiency works very well if you know exactly what you are going to need. But when the anomalous or the unexpected comes along then efficiency is no longer your friend ─ especially when the unexpected becomes the norm”. So how are we going to deal with the unexpected (changing demand, hyper-personalization, public scrutiny, social disruption, etc.) if we’re being controlled by algorithms that steer us towards a future that isn’t very likely to happen?

HENRY FORD: 370% eMPLOYEE TURNOVER

Appearantly, Henry Ford did not believe factory workers needed to bother with the final product and would be more than happy to do repetitive work routinely. However, Ford underestimated the effect this had on people: employee turnover rose to 370%. In 1913 Ford hired more than 52.000 men to keep a workforce of only 14.000. Even today, the automotive industry’s track record on hiring and retention is ‘unacceptable’.

Henry Ford

THE SILO SYNDROME

Best-selling author and entrepreneur Ricardo Semler identified the negative effects of industrial compartmentalization on the level of engagement of factory workers. However, by dividing the frontline operation into separate teams and departments, we’ve adopted a similar form of siloization and as a consequence led office workers to become disengaged as well.

When interdepartmental turf wars obstruct the exchange of information, because of resentment and cynicism between teams, blocking cross-functional solutions and creating inefficiences throughout, the business will fail in its mission.

Silos tend to obstruct effective communication between separate teams and departments, stall innovation, lower employee engagement, increase resistance to change, and thereby decrease operating performance.

LACK OF EMPATHY AND COMMITMENT

Employee disengagement will result in a lack of empathy for and commitment to a customer’s cause. Departments and individual workers become self-centered, entrenching the silo effect, and inevitably hurting the customer performance. This goes back to the business strategy: instead of tying to be the best, leading to machismo, tribalism, fragmentation and friction, we should strive for uniqueness, appealing to our creativity and our sense of purpose and meaning.

JOHN P. KOTTER: OPTIMIZED FOR EFFICIENCY

John P. Kotter, Emeritus at Harvard Business School, stated: “Any company that has made it past the start-up stage is optimized for efficiency rather than for strategic agility—the ability to capitalize on opportunities and dodge threats with speed and assurance”, while adding to it, “The very structure we have created to operate efficiently and effectively today gets in the way of what we need to do to innovate for tomorrow”, therefore, “Organizations need a ‘second operating system’ that works in tandem with the traditional hierarchy, the original “operating system” that the organization depends on to get day-to-day tasks completed and out the door.”

Kotter

The paradox of the modern age, I realized, is that we live in a world that is closely integrated in some ways, but fragmented in others. Shocks are increasingly contagious. But we continue to behave and think in tiny silos.

Gillian Tett, FT journalist, author of The Silo Effect

CROSSING THE SILOS

We are not suggesting to break down the silos: they come naturally. We merely propose to cross the silos and embrace a stakeholder-focused, collaborative and meaningful mode of operation.

To advance from a siloed to an integrated customer development process, we’re suggesting to build a bridge, a fourth department: Success. This department needs to be assigned with the task to pro-actively assist customers in achieving their objectives sooner, rather than later, to raise significance.

RETURNING CUSTOMERS

While it makes sense to want to create more one-off customers as part of a product-centric business model to increase market share, in most other cases -provided we want the business to be(come) more profitable– we need customers to return more often and spend more money over the course of the extended customer relationship.

Therefore, the focus should be on getting customers to return, or at least refer. There is an extra bonus: it is at least 5x times less expensive to retain a customer and get them to repurchase, than it is to acquire a new customer.

UNIFIED CUSTOMER PROFILE

To improve value creation and delivery each frontline employee should have access to a unified customer profile to be able to act on relevant emotions, intent and desires. Customer feedback needs to be shared continuously, preferably at a weekly Customer Roundtable, to advance from a discrete to a collective sense of achievement.

THE CUSTOMER CAROUSEL™

Once you have the right processes and systems in place, developed a collaborative mindset, based on a shared vision, and established cross-functional teams that understand the customer dynamics, you’ll appreciate the high level of detail we’ve put into describing the entire customer lifecycle process.

Common practice dictates that the customer creation process consists of a marketing and a sales funnel aimed at getting a customer to buy. We believe this is a monumental misunderstanding of reality.

First of all, the moment of purchase should never be perceived as an end result, rather as a ‘half-way-through’ moment ─ you’ve created a customer but you haven’t yet satisfied their needs. Secondly, funnels typically address just one side of the engagement process while it takes two to tango.

As such, we see the customer development process as a continuous lifecycle ─ a repetitive process consisting of 4 stages (marketing, sales, delivery, and success), 8 Moments of Engagement (touchpoints), and 8 Moments of Reflection™.

To support this idea, we’ve introduced the term Customer Carousel™ and prefer not to use the term customer journey.

We’ve created 3 visual representations to explain the layout and the sequence of the Customer Carousel.

 #1 - CIRCULAR LAYOUT

The Customer Carousel can be perceived as a screenplay composed of 4 acts (marketing, sales, delivery, and success). These acts are performed on 8 stages ─  the Moments of Engagement. What we perform on each stage is defined by the Prompts. The Moments of Reflection™ is how the audience (customers) experience each performance and respond to it.

#2 - LINEAR LAYOUT (SCHEMATIC)

Because a circular layout might be difficult to grasp, we’ve also created a more familiar linear layout. On the bottom-half you’ll find the brand-initiated Moments of Engagement (and the Prompts that drive it) while on the upper-half you’ll find the customer’s journey, identified by the Moments of Reflection™:

man-left-to-right-black

#3 - LINEAR LAYOUT (ANALOGY)

Another way of looking at the Customer Carousel™ is by perceiving it as ‘passages’. We’ve described it in more detail here. The dark-grey person points to the start of the first sales cycle while the white person points to the next:

Each passage is a step forward in the customer’s journey while each passing-through has two sides-to-a-coin: the touchpoints created by the brand versus the customer’s response (reflection) to it.

Please bear in mind: while this looks like a timeline it points to a recurring process ─ a customer carousel.

CUSTOMER DYNAMICS

Customer Dynamics is a theory on customer-business relationships that describes the ongoing interchange of information and transactions between customers and organizations. It goes beyond the transactional nature of the interaction to look at emotions, intent, and desires. It views interactions as a chain of events rather than single point occurrences. Customer dynamics is a subset of organizational dynamics, which describes how people function together to accomplish a task.

PETER DRUCKER: PURPOSE OF BUSINESS

Despite Peter Drucker suggestion that “The purpose of business is to create and keep a customer”, few companies actually have a customer retention strategy even though an increase of 5% retention rate raises profitability by 25-95% (Harvard).

And: “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”

Peter Drucker

Entrepreneurs must be willing to be misunderstood for long periods of time.

Jeff Bezos, founder/CEO of Amazon inc.

STEP BY STEP

It would be naive to expect an organization to make an instant leap, from a fragmented to an integrated mode of operation. It requires a radically different mindset, involving trust, commitment, and accountability, as well as cross-departmental information systems.

However, it can be done and it is worth your effort, for it has been proven time-and-time again that silos stifle organizations, depriving stakeholders from its full potential.

“In order for collaboration to take place, managers must their silos and their perceptions of power.”

Jane Ripley, “Collaboration Begins with You: Be a Silo Buster”

SCOPE OF THE ROUNDMAP

To perceive the realm of the ROUNDMAP we’ve created a slide, explaining the role of Customer Dynamics relative to Corporate Dynamics and Porter’s Value Chain.

We perceive the Customer Dynamics™ as a business’s intermediate primary activities, derived from Michael Porter’s value chain, that exist in between the back-office and the marketplace, enclosing both the business-touching (or supply-side) as well as the customer-touching (or demand-side) functions of the customer development process.

This perspective made it really easy to position the SWOT-model (Strengths, Weaknesses, Opportunities and Threats), as well as the Backstage and Onstage Competitive Advantages, relevant to defensible differentiation.

VALUEHUB THEORY

Another way of explaining why we divided Porter’s primary and secundairy activities into three dynamics, is by looking at the value orchestration processes described in our ValueHub™ Theory – (ValueHub™ Theory):

Image above: Most often value creation comes at a cost (credit), driven by the business dynamics. Value delivery on the other hand creates revenue (debit), largely driven by the customer dynamics. The result (margin) ─ what can be captured as value to offset the costs of all value orchestration processes ─ is determined by the market dynamics. However, as we have seen with digital platforms, markets can be restructured to allow value to be created and captured in new ways.

BUSINESS STRATEGY

We’ve looked at the Integrated Customer Lifecycle™, the Ultimate Level of Truth™.

Now let’s have a look at strategy: on how we are going to accomplish our mission. The silo mindset does not appear accidentally: more often than not silos are the result of a conflicted leadership team.

As shown in the figure below, the Integrated Customer Lifecycle is a lateral process and as such the completion of a cross-structure top-down vertical execution of the Business Strategy. Together, they make the ROUNDMAP.

ROUNDMAP

The name refers to the cross-structure (Business Model Matrix), cross-silo (Integrated Customer Lifecycle) and cross-market execution of the business strategy.

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ROADMAP

Including culture, values, vision, mission, addressable opportunity, priorities, business model, value proposition, and measurable objectives.

+

ROUNDTRIP

Including marketing strategy, competitive differentiation, brand promise, value proposition, customer experiences, channels, touchpoints and lifecycle dynamics.

If we start off with a fragmented leadership team, each heading a group rooted in their own culture, values, beliefs, symbols, and taxonomies, risking tunnelvision and mental blindness, the execution of the business strategy will become crippled. If departments hoard their own data, reluctant to share it with others, the mission will be at grave risk.

UNIFIED VISION

The way to break down the silo mentality is by creating a unified vision, work towards achieving a common goal, motivate and incentivize cross-functional teams to collaborate and co-create, and measure the outcomes continually.

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Cultivate a deep understanding of yourself - not only what your strengths and weaknesses are but also how you learn, how you work with others, what your values are, and where you can make the greatest contribution. Because only when you operate from strengths can you achieve true excellence.

Peter Drucker, best-selling author and management consultant

MAPPING COMPOSITION

ROUNDMAP™ is covering three structural levels: (1) Business Strategy, (2) Strategy Execution, and (3) Performance. In the figure below you can see how these three levels are laid out in the system.

At first glance the ROUNDMAP might look overly complex, not allowing you to see the forest for the trees, which can be discouraging. However, you’ll need to perceive it as a three-in-one mapping system.

These three layers are intertwined: it makes no sense to measure customer performance without being mindful of aspects like mission statement, objectives, goals, business model, strategy, tactics, or market circumstances.

We believe you are now ready to take a peek at the ROUNDMAP.

One final remark: we’ve designed the layout as a hub-and-spoke, with the value hub in the middle, while the spokes represent the 8 stages that customers typically go through ─ not necessarily in a fixed order.

VIEW THE ROUNDMAP (PDF)

TARGETED AUDIENCE

ROUNDMAP™ aims to help firms, whether for profit or non-profit, that are faced with disappointing customer performance – due to siloization or otherwise – and are looking for ways to improve operating outcomes. ROUNDMAP™ suggests to focus on cross-functional collaboration, create more meaningful and purposeful value, build longer lasting differentiation, advance business modeling, and shift to proactive customer services; all leading up to increased customer loyalty.

“Customer centricity is a strategy that aligns a company’s development and delivery of its products and services with the current and future needs of of customers in order to maximize their long-term financial value to the firm.”

Peter Fader, author of “Customer Centricity” and Professor of Marketing at Wharton University.

BUSINESS MODEL MATRIX™

We’ve just looked at the overall composition of the ROUNDMAP. After having created the Integrated Customer Lifecycle™, we found that the traits of two known business models, product centricity and customer centricity, correlated to marketing and sales respectively. This opened up a whole new way of thinking about business models.

By adding an extra dimension, i.e, serviced used versus products sold, we were able to incorporate, in addition to the known AS-A-PRODUCT type of business models, two AS-A-SERVICE type of models into a two-by-two matrix.

Business Model Matrix™ provides a single framework of possible business models, ranging from Product Centricity to Network Centricity. Whether you want to leverage your ROI from a Share of Market or a Share of Transaction, or otherwise, is part of your strategic heading, while an additional choice of value discipline offers further means of differentiation.

Previously, a business was either focused on growing market share (product-centric) or gaining a larger share in the customer’s wallet (customer-centric). But these two models did not account for the rise of the platform economy, servitization or the sharing economy. The framework was incomplete.

After matching Marketing to Product Centricity and Sales to Customer Centricity, we were able to identify Delivery with what we call Resource Centricity and Success with what we refer to as Network Centricity. This then became the Business Model Matrix™.

Culture eats strategy for breakfast, execution for lunch, and performance for dinner.

Edwin Korver, author and management consultant

© 2014-2019 Edwin Korver, CEO Tenfore BV – all rights reserved – MOBILE +31-(0)6-52341111
Registered at BOIP.INT i-DEPOT 094029 (3.0), 095482 (3.1), 103610 (3.2), 105496 (3.3), 106619 (3.4), 110465 (3.5), 115384 (3.6)

4 ELEMENTAL BUSINESS MODELS

The Elemental Business Models™, identified by Edwin Korver, each have a distinct dynamic. Complementary to Don Peppers’ graphical representation of product and customer centricity (the AS-A-PRODUCT business models to the left), we added two new graphs to complete the series.

Leverage greatly determines the business model. Prior to the Business Model Matrix™ business literature recognized two levers: Share of Market (blue) and Share of Wallet (green). We pride ourselves to have complemented the set.

The leverage of a resource-centric business model, Share of Utilization, comes from a ROI on deployable resources. For instance, if you deploy a car in a car sharing concept, the objective is to utilize the car to its maximum capacity (Car2Go).

On the other hand, if you offer a ride sharing platform -a network-centric business model- your objective isn’t to plan for capacity, but to get as much riders and ride-hailers together to facilitate rides and obtain a Share of Transaction (Uber).

A product-centric business model focuses on gaining market share to profit from economies of scale, while a customer-centric business model focuses on a select group of customers that are likely to increase spending.

A resource-centric business model is all about planning for capacity by utilizing a syndicated resource, while a network-centric model aims to grow participation of an aggregated network to capture a share of transactions.

ROUNDMAP STRATEGIC PLAYBOOK

To understand the level of sophistication of the ROUNDMAP™, we have created a strategic playbook, explaining some of the most noticeable traits of each of the four Elemental Business Models™.

Whether you aim to profit from economies of scale or from planning for capacity, or something else, is up to you. But each business model has concurring dynamics that are hard to ignore. F.i., a product-centric business model demands campaign-based marketing, while a network-centric business models benefits from word-of-mouth. A resource-centric business should emphasize on the service chain, while a product-centric one needs to address the supply chain. Et al.

There is so much more to this. If you want to learn more, subscribe to our newsletter (below) or apply for the Inner Circle Membership to access exclusive content and to attend the ROUNDMAP™ Introduction Course.

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PLANNING FOR SUCCESS

Choosing the right business model and value discipline is be vital to success. Airbnb’s market valuation ($38 billion in 2018) is higher than Hilton and Hyatt combined, yet it has no hotels. The new AS-A-SERVICE business models have proven to be alarmingly disruptive and there will be more to come.

“I know firsthand the complexities of leading an enterprise through business and technology transformation. It takes intense focus, a strong drive, and a clearly communicated to inspire and take an organization from where they are, to where they need to be - or where they want to go.”

Safra A. Catz, co-CEO, Oracle Corporation

TRANSFORMATION

We’ve discussed the Integrated Customer Lifecycle, Business Strategy and the Elemental Business Models. Now let’s have a look at how we can change our course to adapt to the world around us. We believe business models have evolved over time in two directions: either through Business Model Shifting or Business Model Regeneration.

Business Model Shifting is by far the most disruptive to the business enterprise: it is a revolvement to the next Elemental Business Model™, brought about by competition, market opportunities, regulation, consumer trends, or otherwise.

In 1974, IBM was known as Big Blue. As the company struggled to battle for market share in many areas, IBM soon realized that a select group of customers were likely to spend more than others. By focusing on this smaller group, IBM could maintain its high standards and price levels. However, in 1993 it found itself in dire straits, reporting a $5 billion loss, the highest in American corporate history. Desparate to turn the ship around, it could have lowered its prices or introduce a cheaper brand. Instead they acquired the consultancy branch of PwC and named it IBM Global Services. One decade later the company had trippled in size. IBM had shifted from a product-centric, to a customer-centric, and finally to a resource-centric business model – monetizing its highly skilled workforce of IT system integrators and businss consultants. However, in 2017 the company again reported a $2.6 billion loss. They will need to fill the capabilities gap to become a network-centric business, which is the next logical path of business development.

SHIFTING AND REGENERATION

Business Model Regeneration has been going on for ages and will continue to progress for ages to come: it is an evolution of an existing business model, driven by ever-advancing technology, new rules and regulation, etc.

One might think that the Sharing Economy is something completely new, but it isn’t. If you ever took a plane, train or taxi, you were essentially sharing a resource. And what about the Platform Economy? Nothing new either. Over two thousand years ago, traders and buyers met along the Silk Road, a series of trade routes between China and Europe. Facilitating a digital platform is similar to setting up a physical marketplace.

The evolution, clearly, has transformed the business model from a physical (marketplace) to a digital space (marketspace). In the same manner as digital is transforming industries into ecosystems, and (physical) workplaces into (digital) workspaces.

And I’m sure, in time, our digital self will have a birthspace too.

DESIGN FOR Experience

Depending on the Business Strategy, value (equity) is derived from a focus on one of four Elemental Business Models™. For instance, brand equity (storytelling) is vital for any product-centric business, while an excellent customer service experience will be more crucial for a resource-centric model.

Experience Design (ED) has been at the forefront for some years now. However, few realize ED has to be tailored to the business model. For instance, in case of a product-centric business model the focus should be on building brand experiences, while in case of a Resource Centricity it is mostly about the user experience.

ROUNDMAP_Experiences

Customer Experience, in our view, isn’t the all-encompassing ED. It is the main driver in case of a customer-centric business model, in which a group of comparable customers – for which the business can fulfill more of their needs – mean more to the business than others. They are their preferred customers and customers need to experience this.

DIGITAL TRANSFORMATION

Now you understand how a business strategy of ‘trying to be the best’ leads to machismo and tribalism, sabotaging cross-functional solutions and deminishing the chances of achieving any key objective.

Considering all this, what are the odds that digitalization by itself will transform a business?

70% of Digital Transformation (DT) initiatives fail, according to a recent McKinsey study. Indicating a humongous amount (900 billion out of 1.3 trillion USD over 2017) of money and time wasted, let alone the opportunity costs.

A business does not transform simply because it adopts fancy digital technology, like artificial intelligence, big data analytics, micro services or some other bag of tricks. Yes, the world is changing and business will need to adapt. But the biggest challenge is not to cope with customer expectations, or to try and outsmart competition (first-movers advantages are true some of the time), but to transform the mindset of the people inside the company.

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NEWS

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