Ever get frustrated at being asked to pull together a business case for what appears to obviously be the right thing to do? If so, you should enjoy our latest guest blog post.
Simon Norie from Custerian shares his thoughts on how to deal with this frustration…
Can’t we just do what our customers want us to do?
We get this comment a lot when it comes to putting change in. The “they have said I need a cost benefit case – surely they should just know we need to do this?” cry for help. In today’s world of agile, aligned ways of working, where billion £ business’s are created virtually overnight, you might think we would come out in support of a position that says: If it’s aligned to Customer needs, then you should just do it. But we don’t and that is because doing a cost benefit (or business case, or return on investment etc) has a lot of merit.
Here are a few:
And finally it has another major bonus – The plans you have for change are significantly more likely to get approved because most of us work in business’s where the final arbiter for approval is ROI (Return On Investment).
As with many things, it’s not about if you should do something or not, it’s about how.
So how do you go about building a cost benefit case?
So a bit like our thin strategy approach (keep it clear, customer centric, emotionally engaging & with a clear financial outcome), we have a view on cost benefits. You should be able to quickly access the cost, and therefore the benefit of any changes you wish to make, on an ongoing basis. It should be a core part of your decision-making process.
Here are some tips on how to do this:
Is it really that easy? In short… yes.
But as with most things in business, what can be an easy thing to outline in 5 steps, proves a bit more difficult in real life. Usually because a lot of informal internal process builds up to protect functional budgets.
But don’t be distracted and again this is where Finance come in. They have a cross functional remit, so they can help look across functions and ensure the end result has credibility.
But how does this help build a benefits case?
Once you have a Cost To Serve Model (specifically the metrics by process step aligned to the cost), you can used it to test the outcomes of different ways of doing things.
The biggest gain you can get to quickly using this approach is to look at the true cost/impact of failure. This can be both the downstream (perhaps a logistic failure) or upstream (bad service experience) impact of getting something wrong. Because you can see how much cost you have wasted, or how much you are going to have to expend rectifying it.
And guess what, the same peer group that helped create the cost to serve model, will almost certainly know what could be done to flex the model to improve it. More than that, you will be able to look at what the ripple though effect is of changes in one area on others.
Even better. This team, who will have a business wide view of the process used to ‘sell’ your products to your customers, can also then use Customer Experience methods to identify what areas of the process should be looked at to create even greater benefit – but that is not for now.
Surely this is too simplistic a view of things.
I understand that thought. But equally I have worked for a lot of very large companies, in both the service and product sectors and my general experience is this:
My view is few companies have a got a workable view on their cost to serve model at a level of visibility and understanding that means the colleagues working in the business day in day out, can make a significant impact.
It is also worth saying that even at this high level, you need to maintain a rigour over the metrics and costs that are being used. The old adage of rubbish in, rubbish out, is always true and high level does not mean lots of ‘best guess’ variables will be ok.
But getting your Cost To Serve Model into this format, means the people who can make the biggest difference every day, have the means to do so.
Do you agree with Simon? What’s your experience of driving Customer Insight led changes & did a business case help?