Was it Something I Said?
Every CEO's Worst Nightmare
By Vijay Mehrotra
Recently, during a daylong meeting, I heard some surprising information from one of our guest speakers. His firm had conducted a recent poll of business leaders (CEOs, VPs, directors, managers and business owners) during the late 2001/early 2002 timeframe [1]. Note that these dates are after both the bursting of the stock market bubble and the tragedies of Sept. 11, a period featuring declining stock markets, significant job losses and economic pessimism.
The survey's core question was simple. What are your top two operational problems? In other words, "what keeps you up at night?"
These business leaders, even during a recession, are most worried about internal operational processes (named by 31 percent of respondents) and sales and marketing (22 percent). Based on the results of this survey, the executive mind seems preoccupied with two major questions:
- Today, can we simply organize ourselves to do our jobs?
- Tomorrow, where will the revenue come from?
My jaw fell when I heard this. Until that moment, the core articles of faith underlying my professional career were, roughly stated:
1. operations research has great potential to reduce operating costs;
2. executives treasure such cost savings above almost everything else; and therefore
3. OR is destined to grow in its importance to the CEO; and thus
4. we (along with our IT brethren) will eventually rule the business world.
This basic argument had suddenly been undermined. The Fortune 1000 CEO would never love me as long as my focus was on efficiency and cost savings.
Awakening No. 2:
A few days after I returned to the office from this meeting, I happened to be on the phone with a software industry analyst. We were discussing Blue Pumpkin and our customers, the vast majority of whom are call center operations directors and their IT counterparts. Our conversation moved onto operational success metrics. "How," she asked me, "do your customers measure success?" Without thinking very much, I described the usual industry metrics: number of abandoned calls, percent of calls answered within X seconds, average handling time, first call resolution rate, employee attrition rate.
Because she is a kind person, she did not call me out for being outdated. She simply mentioned that today many companies were expecting more innovation and contribution from all parts of their operations, that cutting-edge call centers today were actively involved with intelligent customer segmentation, first-call resolution strategies, and sales and delivery of value-added services.
She then described one organization that had become much more customer-focused. A cross-functional team had been assembled to understand what their customers and prospects actually wanted. From here, significant changes had been propagated throughout the company. For the call center, this had meant heavy investment in training and technology that enabled its agents to create successful customer experiences. The result had been increased customer satisfaction, revenue and market share. Interestingly, the call center's performance on traditional metrics had slipped visibly.
"Business as usual is actually becoming more unusual," she mused.
Lessons Learned
First of all, we must begin by facing up to the truth: As long as we are positioned as "the efficiency experts" we will not be of significant interest to the CEO or to senior management. Even in a slow economy, corporate leadership understands that cost-cutting alone is not a pathway to a successful business.
This is not to say that applications that drive down costs are not valuable. Operations managers are under more pressure than ever to do more with less, to leverage intelligent information systems and business processes to gain efficiencies. They need our help, and will continue to be receptive to our traditional message.
Which brings us to an odd paradox: Nearly every sales person that I've ever met seems to lament not having access to more senior levels in the organization, mainly because these people have access to more funding. Yet classical OR solutions — and the software that encapsulates them — are likely to appeal more to individuals lower in the organization, people closer to operational problems. We need to respect them.
Meanwhile, these folks in the trenches are howling! Not only are they being asked to squeeze costs, but the game is also changing around them faster than ever. Mergers and acquisitions, new marketing schemes and increased customization all adds up to more chaos for the operations folks — which, as we know from the aforementioned executive survey, is the No. 1 thing that executives actually do worry about a lot. I hear an opportunity.
So, beyond optimization and cost savings, we also need to develop — and promote — the capability of our solutions to provide visibility into what is happening, to understand risks and to offer insight into the impact of future business changes. To do this, however, we will have to change the way we think.
It all starts with listening.
References
- Mayer, Peter, "Is the Money on the right Pitch?" Business and Economic Review, April-June 2002, pp. 20-22.
Vijay Mehrotra (Vijay@BluePumpkin.com) is vice president of the Solutions Group at Blue Pumpkin Software.
OR/MS Today copyright © 2003 by the Institute for Operations Research and the Management Sciences. All rights reserved.
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