Warning: Your Company is WASTING Money.

Warning: Your Company is WASTING Money.

Companies are throwing away money.  The bottom line is sick.  Margins are dying.

In my last post I said the number one sign of “Information Inefficiency” is the clipboard.  To take Lean and Six Sigma to the next level, a disruption must occur.  The workplace experience must be transformed.  However, accomplishing true disruption will take more than replacement of each paper process one by one with a virtual process.  Replacing each clipboard in your company with a tablet is simply not enough.

Your company is losing money to the clipboard mindset.

The clipboard mindset has several symptoms:

  • The worker capturing information cannot easily pass that expertise to new employees.
  • The information lives in an abbreviated form until the worker adds context elsewhere.
  • The form/paperwork itself requires training before it can be utilized.
  • It takes more than a day for the information to “go digital”.

The clipboard mindset is pervasive in the digital era.  Your workforce may not carry around paper forms on a clipboard with a No. 2 pencil anymore by my experience with hundreds of companies is that the inefficiencies of the clipboard mindset spread like a virus into our laptops, tablets, and smart phones.

What’s the real cost of clipboard mindset?  

#1 – Delayed information symmetry.

Imagine the three most important pieces of information for your P&L.  Where did it originate?  Where does it go?   How long did that take?  In economics, information asymmetry is a crucial element of Game Theory and the Nash Equilibrium.  In a zero-sum game in which each player tries to make a decision based on the potential decisions of every other player, “information asymmetry” is like being the only poker player who can see another player’s cards.  While we typically apply this to businesses competing with one another, the same can apply to every decision that will impact more than one person.

Although it is not possible to know the same information that your competition knows about themselves, minimizing the time it takes to know your own business is critical.  In the information age, information symmetry up and down and across the organization must be instantaneous to keep decisions informed.  A clipboard delays information symmetry between the person who gained the insight and the person who needs to make a decision about it.

 

#2 – Social Decontextualization.

Whatever piece or pieces of information you’re imagining right now, this information is fundamentally social in nature.  How often does it need additional explanation?  How long does it take to get that explanation, or – worse yet – how often do you dismiss it because an explanation isn’t available?

Whether that information came from a conversation with an employee, a site visit by a sales manager, or diagnostic output from specialized machinery, every clipboard – physical or digital – is missing human context.  Every checkbox strips out nuance, every fill-in-the-blank limits information sharing, every abbreviated word gambles against forgetfulness.  Context is fundamental to human expression.  Why is it decontextualization so inefficient?  The social and tribal part of our brains and makes decisions has no capacity to understand language.  As Simon Sinek shares,

Our newest brain, our Homo Sapien brain, our neocortex, corresponds with the “what” level. The neocortex is responsible for all of our rational and analytical thought and language. The middle two sections make up our limbic brains, and our limbic brains are responsible for all of our feelings, like trust and loyalty. It’s also responsible for all human behavior, all decision-making, and it has no capacity for language.

Sharing the feeling of the moment is the most important element of taking one person’s social context and passing it to another as actionable information.  A clipboard captures very little of our context so that is not passed from the person who felt the moment and the person who needs to make a decision about it.

 

#3 – Decision Fatigue.

If your company has introduced a wellness program, you may have already heard of the idea of “presenteeism” – showing up to work for your normal day but so “out of it” that the contribution is well below 100%.  While the wellness community focuses on the impact of poor-but-not-quite-sick “physical” health, the clipboard mindset is the root of another form of presenteeism: decision fatigue.

The neuroscience of decision-making shows that the entire brain and even a fair amount of the body uses up resources in the process of turning executive function into action.  The more you have to recall from long-forgotten memories, the higher the level of attentiveness required, the more stress or other emotions that get involved, and the greater the threat or potential reward of the moment – these drain taxing multiple systems in a smartphone (geolocation, graphics processing, bluetooth) drain the battery of a smartphone.

Problematically, while we can make other plans for getting directions if our smartphone battery dies, when our decision-making “battery” is exhausted, we often have several hours of work and decisions to make!  Feeling stuffy due to allergies may reduce your attentiveness, but hitting the decision fatigue wall at 2pm causes the brain to rely purely on fight, flight, or freeze.  This type of presenteeism doesn’t just make us less efficient, it makes us overreact, avoidant, or complacent about the status quo.

While productivity experts will recommend structuring your day and creating a routine that removes unnecessary decisions, these are the low-hanging fruit of decision fatigue.

Transformative mobility revolutionizes businesses by tackling the the toughest, most painful consequences of decision fatigue – adding context, recommending information, removing fear of failure, minimizing the need of distant memories, communicating instantly rather than adding the fear of forgetting the meaning of your own notes.

 

Breaking the Clipboard Mindset

If your current Mobility Strategy has left the clipboard mindset intact, move the conversation to finding ways improving the workplace experience can increase the engagement and effectiveness of your employees:

  • Capture context seamlessly – location, weather conditions, and biometric data are all becoming simpler to capture along with the information the employee adds
  • Use visual cues rather than words – The decision-making part of the brain doesn’t read the words, use photo, video, and metaphor rather than words
  • Help answer questions – don’t just fill in the blank:  one choice should simplify the next choice by narrowing the possible options, reducing the stress of poor decisions
  • Proactively provide information – from geofencing to notifications, employees should not hunt for what they need – it should already be there
  • Rely on search over personal memory – a simple front-end and powerful back-end will empower workers to find what they need rather than memorizing it

 

STOP wasting money!

The clipboard mindset is destroying the ROI of your human and IT resource investments, perpetuating bad margins through inefficiency and ineffectiveness, it is time to break yourself and your company free.

If you are looking for ideas or training on these concepts for you and your team, send me a message.

 

Disrupt & Win: Next-Level Lean Process Improvement

Disrupt & Win: How to Achieve Next-Level Lean Process Improvements with Custom Apps

Is your business having trouble keeping up?

It is time to get lean.

Kaizen – Continuous Improvement

Kaizen is a core principle from Lean that lays the foundation of how we choose the right custom enterprise mobile and web apps for process improvement efforts.  Loosely translated from Japanese, kaizen means “change for the better”; but kaizen is bigger and bolder than tacking on an improvement to an existing structure – it is the process of continuously breaking down a process, removing unnecessary effort or waste, and rebuilding it as a more efficient and effective process.

In custom enterprise app consulting, kaizen is the ultimate goal of the discovery and analysis we follow in finding the key enterprise workflow that is both proprietary to an organization’s competitive advantage while (sometimes surprisingly) it is also a source of pain and waste.  Because this seems contradictory, companies rarely ask for the application that will make the biggest difference to their organization.  To plan a truly disruptive roadmap that will position your key processes for sustainable competitive advantage takes a level of honesty and vision that is not easy to tackle alone.   Here are some key concepts from Lean that we use to help you plan your enterprise app portfolio and take your kaizen to a whole new level.


The Three Actuals – Genba, Genbutsu, Genjitsu

Lean consulting begins with finding the 3 Gen or “actuals” of your enterprise.  Kaizen is impossible without direct insight into the organization, so these three “actuals” are critical to finding the right apps that can succeed big and drive the adoption of innovation and mobility as a competitive strategy:

  1. The Genba – By visiting the Genba or “Actual Place” where business is done, products are built, and revenue is generated, an enterprise solutions consultant can view and understand the operations that create value, whether in a factory, a medical facility, or a sales showroom.  Through first-hand observation, rather than conversation, far more can be learned about what an organization does, how it is done, and why it is done.  Whiteboards and conference calls can never convey the real heart of an enterprise, the “What’s the point?” or the “What’s it worth?” as it is experienced by the people who keep each process moving, so coming to the actual place is critical to building out a solution that speaks to the pain felt by the people performing the work.  These pains tend to originate from inefficiencies and information asymmetries that workers will protect out of a fear of change.  Changing a process through training or a set of new rules often fails for this reason.  The disruptive influence of a mobile solution shortcuts this fear – mobile adoption rates are accelerating and new generations of employees demand the simplicity and focus of apps in the workplace.  These employees must capture real value in order to drive higher revenue and operational cost savings – getting to know their daily workplace experience is crucial.
  2. The Genbutsu – If possible, a great consultant doesn’t just watch, it is even better to directly interact with the genbutsu or “Actual Thing” – the real equipment being moved throughout a hospital or the customer “hand-off” artifacts.  In Lean Manufacturing, this often focused on the actual parts being assembled, the path those parts travel in a factory, and finding ways to simplify repetitive motions, reduce unnecessary travel distances through better placement of the work stations, or reducing the complexity of a step in the process by changing the order in which pieces were added to the final product.  In enterprise mobile solutions the “actual thing” is often information and the path it takes before and after that information becomes data and drives actions that produce revenue.  Information is easily decontextualized, so minimizing context-switching in the information-data-action flow is critical.  Mobile solutions drive context-awareness that turns social information into actionable data immediately and cuts out waste.
  3. The Genjitsu – Jitsu is an art, skill, or practice; a word that evolved etymologically from the characters meaning “a step along the middle of a road”.   In Lean consulting, this means we must grasp and communicate the “actual situation” as it pertains to one process as a step in an overall flow.  More importantly, we must quantify the reality of the process as objectively as possible, separate from emotional responses due to ego, social status in the organization, or feelings of blame.  We do this by obtaining data, making hypotheses, documenting workflows, and validating assumptions.  The goal is to not only make a well-informed decision about the most valuable apps that can be created, but to validate the features that will be part of it.

Once the three “actuals” are known, sources of waste can be objectively identified, solutions crafted and prioritized, and an initial Minimum Viable Product can be determined.  First, let’s review how we can create custom apps using proven Lean process improvement tactics.


Just In Time – Why mobile?

Mobile apps are fundamentally on-the-go and on-demand.  The instantaneous nature of communication using mobile allows the Just-in-Time management philosophy  to apply to operations processes, delaying resource commitment and investment until it is absolutely necessary.  This allows the shortest possible feedback cycle between demand and supply and removes waste due to information asymmetry.  If you have ever been left alone as a sales rep checks inventory or watched someone wait on hold to obtain manager approval, you know you know how painful – for the employee and the consumer – a lack of instantaneous information-data-action can be.

Just-in-Time is well defined by its original proponent, the Toyota Production System:

Supplying “what is needed, when it is needed, and in the amount needed” according to this production plan can eliminate waste, inconsistencies, and unreasonable requirements, resulting in improved productivity.

via Toyota

Since our app strategy is founded on upgrading key resources by removing wasted time and effort, mitigating inconsistent process throughput and output, and unreasonable rules and requirements to “protect” against costly mistakes, Just-in-Time is central to every great enterprise app portfolio.  Social information becomes actionable data, from answering time-sensitive questions to triggering purchases.  Real-time communication can replace unnecessary meetings, a highly focused and intuitive user experience can replace training memorization of rules.  The ability to ignite a chain reaction from 3 taps of an iPad is an incredible time and cost saving that can also create enormous additional value that can be captured more quickly.

Implementing Just-in-Time through custom apps allows real-time analytics about the process and its evolution, a “version history” for process improvements, gamification of as-you-work training, and a real-time feedback system for future kaizen.  This means creating continuous flow, level-loading process steps, creating “smart” tools, standardizing quality of work, and balancing minimal investment against highest value productivity is not only simplified, it is easy to validate process impact quickly.


The Yamazumi Board – Creating Continuous Flow

The first step in improving a process with one or more apps is documenting the existing workflows as the focal point of discussion and as the baseline for hypotheses about potential improvements.  There are software tools for this, but post-it notes on a whiteboard can work as well.  Yamazumi literally means “to pile in heaps” and this is exactly what how the analysis is completed, by stacking each step in a process in columns representing each person or role in the workflow.  This could be fairly high-level, tracking the flow of a paper form across the organization, or extremely granular, such as every step in the manufacturing and assembly of a complex product.

via Michel Baudin

By documenting the steps of a process in this way we can easily visualize the imbalances in a workflow, identify the “pace maker” process, discover bottlenecks, and clearly see the cost of unproductive downtimes.  Combining roles that cause diffusion of responsibility, separating roles that cause unnecessary task switching, and removing unnecessary “fail-safe” measures will remove waste and reduce cycle time, making the process more efficient overall.

Once each process in the workflow is organized into an ideal future state on the yamazumi board, we can easily see the specific tool each role will need to be as effective as possible at creating value.  If each tool has a unique user base, we will consider each tool a separate app that we can evaluate and prioritize based on expected returns.  Next we evaluate how strategic disruption using a mobile-first mentality will create impact above and beyond simply reorganizing existing resources.  Whether we are targeting information, inventory management, or customer interaction, our app portfolio needs to work as a seamless ecosystem that facilitates continuous flow across the entire value stream.  Through notifications, context awareness, and on-the-go data connectivity, we are able to brainstorm solutions to each identified pain that can achieve heijunka.

Heijunka – Level Loading

The Lean Lexicon, 4th Edition defines heijunka as:

Heijunka is leveling the type and quantity of production over a fixed period of time. This enables production to efficiently meet customer demands while avoiding batching and results in minimum inventories, capital costs, manpower, and production lead time through the whole value stream.

Once we have seen how our piles of work are should be distributed to achieve continuous flow we then need to identify the pains and inefficiencies that exist even when the process is running smoothly.  Before we can prioritize a roadmap of custom mobile apps, it is important to know the elements of a process that are consuming unnecessary time and resources, find and remove batch-and-queue systems that create process bottle necks, and smooth out supply and demand.  Because we have distributed process steps across focused roles using the yamazumi board, we can now look at the specific pain points that each tool can address for each role.

In Lean Manufacturing, the concept of heijunka is taught using forecasting in supply chain management.  The more unpredictable the demand, the more advanced the forecasting algorithm may be but delaying differentiation, stabilizing production, and reducing inventory holding costs is always possible.  When creating disruptive-grade process improvement with custom mobile apps we can apply the same principles to “memes” and look for the inefficiencies, loss of fidelity, and bottle necks in processes that transform context-specific social information into data that is actionable across multiple roles.  To win at disruption and to resolve internal information asymmetries and bottlenecks, we need to think through solutions that remove the noise from the signals we rely on to forecast processes.  To this, we use custom apps to control selection, throughput, and output.


Jidoka – Autonomation

From the Toyota Production System, the concept of jidoka – “automation with a human touch” means that machines are “smart” enough to identify their own failure, empowering human operators to rectify the problem before faulty parts enter the production line.  Before autonomation these parts were only tested at the end of the production line, so a single machine creating bolts for engines could make an entire day’s work unsuitable to ship!  To mitigate the immense risk of an entire factory-day’s production being scrapped, an operator could be placed at each machine, checking quality of output at regular intervals.  Jidoka is the next evolution of this process improvement, so that machines judge their own quality and a single operator is able to validate the accuracy and quality of several machines, reducing the number of resources required per machine.

In an enterprise app portfolio, the ability to focus a user on completing a single workflow quickly with context-based help and input validation accomplishes similar autonomation.  The more focused an app is on a single user completing a specific task, the less we will need restricted access and complex logic.  Instead, the technological investment can be focused on context awareness and assistance.  This creates a powerful ability to the guide subjective observation of an employee into objective judgment.  Rather than increasing training, creating new policies and punishments, and increasing managerial oversight – an a attempt at a “fail-safe” environment – we want to create intuitive “smart” solutions that create a “safe-to-fail” environment in which some mistakes are no longer possible and consequences are minimized.  This empowers employees to consistently succeed and removes the stress of failure, all while reducing the need for direct managerial oversight and human approval processes.  Anywhere your employee is asked to supply critical information or responsible for continuous flow to the next process step, we want to facilitate responsiveness and guided interaction, then capture and aggregate data as Business Intelligence that can inform both the worker and organization leadership about decisions being made.  Anywhere an employee must manage machines or technology, the inner working of which only a specialist would understand, we want to create an interface into the health of the process rather than set the false expectation that every employee can be skilled at

Once the solutions to process pain and waste are imagined – with an eye on “smart”, intuitive mobile workflow tools – we want to look for ways to ensure that throughput and output are consistent in time, effort, and quality.


Standard Work

Through effective information architecture and user experience design, the mobile app user is able to follow an established and intuitive workflow of interactions that are ideally context-aware.  So in addition to the focus, empowerment, and autonomation improvements, going mobile is a time to analyze current best demonstrated practices internally and externally, and standardize them.  Standardizing what is done, how it is done, and creating consistency of output not only reduces the necessity of identifying and addressing under-performers, it creates a context for the employee in which output quality is held constant for them, enabling focus on critical thinking and social engagement rather than policies and spreadsheet-like information tables.  Even more importantly, once work is standardized with a mobile application (e.g. instead of a document template) the consistency of output and capture of Business Intelligence will allow an objective review of “best” practices, assist with hypothesis and experimentation removing some of the emotion and politics from the kaizen process.

Once changes are identified, effective MDM enables your organization to control the shift to a more effective practice by simply releasing a new version of the software.  Build any training (using interstitial screens) and feedback (with modal per-feature ratings) directly into the application.


Minimum Viable Product

The end goal of removing interruptions to continuous flow, level-loading processes against fluctuations in supply and demand, and removing information asymmetries and process waste is to attain Minimum Viable Production – a process state in which we find a “sweet spot” in the tension between minimizing invested value while maximizing return on that investment.

This goal will need to be reached on three levels:  the process being improved upon, investment in improving the process, and prioritization of the custom app investment portfolio.  Because we are disruptively and potentially drastically rebuilding a process we need to understand the point of diminishing marginal utility for inputs to the process itself as a precursor to determining the investment we should make in it.  If we are attempting to increase revenue through an improved sales representative process, we need to recognize that increased capacity does not increase demand – we will need to identify stabilizing and increasing supply can result in an unfair advantage in the market.  If demand for a process output is unlikely to grow, investing in increased capacity is ill-advised.

If we focused purely on minimalist production, we would drastically rebuild our core operations processes – stripping out anything unnecessary to gaining the “easiest” productivity possible.  A true focus on minimalism might even cut revenue in favor of margins by creating less value.  Opposing this approach would be a total focus on viability, in which we invest to upgrade processes and resources regardless of ROI to achieve the most robust value stream possible.  Ideally, this would give us sustainable competitive advantage, assuming we raise so many barriers to entry that we create near-monopoly conditions.  However, most gaining economic rents in this way can take years to capture, making the investment risky.  By maintaining a tension between minimal investment and maximal viability, we can minimize necessary inputs while holding output constant, increasing process ROI.  If desired we can then establish a path for increasing input while holding ROI constant.

With mobile apps, we facilitate minimum viable product by transforming the nature of the steps taken in a workflow, the number of steps, the number of operators required, and minimizing time to complete each step.  By removing all delays in information transfer and introducing autonomation we are able to bring downtime to an absolute minimum.  Maximizing ease of completion and minimizing time to completion is therefore the overarching goal of mobilizing any process.

Once we have a full understanding of the next-level lean processes, we take the mobile apps we have dreamed up and create a prioritized roadmap for investment in our app portfolio.  While the “big dreams” white-boarding session is an important first conversation, defining Minimum Viable Product for both the processes we will disrupt and the process improvement investment we will make is critical to ensuring the app roadmap is continuously focused on the improvement with the highest incremental impact.

How to use the Lean Canvas for App Planning

Lean Canvas

The Lean Canvas via http://www.leanstack.com

The Product Vision Imperative

Imagine a Ferrari with no steering wheel and no tires – no amount of horsepower or torque will win the race if a car has no direction. Increasing resources or efficiency without alignment and traction on a common strategic vision is utterly ineffective.  While agile, scrum, and XP will maximize velocity, it is critical that we ensure the well-formed team has ultra-clear, laser-like focus on the goal.   After all, no increase in velocity or decrease in impediments can supplement a lack of understanding of what to build and why it should be built.  This is why the ability to clearly articulate the product vision of an app is critical to ensuring we don’t just build the right app and build it fast – we build it for the highest possible impact.

There is a natural 3-level taxonomy to an app.  The app Narrative (the entire app) is made up of Epics (major features), Epics are made up of Stories.  Because an app (as we’ve previously defined it) is a relatively small and ultra-intuitive tool with a highly focused outcome, stating the Narrative is the Lean way to succinctly express the workflow being created, who will use it, and why.  It conveniently looks like a massive user story:

  1. The Narrative – A a sales rep, I want to support customers without having to turn my back or leave the room so I can build better rapport as their consultant.
  2. Some Epics – Check inventory, Answer questions, Take payment, Notify inventory team
  3. A User Story – As a sales rep on the sales floor I want to use Apple Pay to accept payment from my customer  (Part of the Epic “Take Payment”)

The simplicity of this description will help align the team on the product vision, but it glosses over the business case that justifies the vision.  This can be done efficiently for multiple apps using the Lean Canvas approach to documenting the business case for an app.


1 – Identify the Problem

Because the scale and scope of any given app MUST be laser-focused we must start with identifying the key problem we want to solve.  Building the right app – A Billion Dollar App – means we don’t build a hammer and start hunting for nails.  We identify the nut, bolt, or screw, take stock of the complex setting in which we find it, and build the right tool for the job at hand.

“Customers care about their problems – not your solution.”

-Dave McClure

This begins with the Problem Statement.  The top three major pains for a single (existing) operations workflow often tie together in one overarching “problem”.  The Billion Dollar App for an enterprise should also have no feasible existing alternatives.  We aren’t reinventing the hammer!  Instead, we want to identify the problems that are unique to the organization, making a custom solution the best approach.  If a SAAS product for a non-core process is available for a client’s pain, we do the right thing and suggest the correct existing solution.


2 – Know the Target User

An appropriately sized and focused app must have a well-defined target user base.  In marketplace consumer apps, this means identifying the target market segments in which an app will compete.  For enterprise apps, this is typically limited to single business function (e.g. sales).  While there may be a subset of users that have customized versions of the same experience, we avoid creating apps that lose focus by combining multiple unrelated workflows.  For example, if managers want a dashboard for their sales rep app, the manager narrative (focused on analytics and the big picture) should be separate from the sales rep narrative (focused on point-of-sale conversion).

This is often accomplished by creating User Personas that describe an imaginary but likely user for the app.  In order to properly determine Minimum Viable Product, it is essential to know the “80/20 rule” for the target user base.  There are three personas that will assist with effective planning discussions:

  • The Early Adopter – Knowing your early adopter is critical.  Whatever initial revenue or increased productivity the app will drive, the early adopter will drive it and provide the initial wave of feedback that can inform a pivot.
  • The Average User80% of people will use 20% of the app.  That first 20% of features will also deliver 80% of the value created.  Prioritize the high-impact feature that the average user will make use of and defer the rest until later. 
  • The Power User – This user is both useful for building out the longest-term set of possible features and for helping define what type of person will likely not get everything they want.

3 – Summarize the Unique Value Proposition

Once we identify the problem at hand and who it impacts, we quantify the value a solution has the potential to generate.  In enterprise process improvement apps we call this “Impact” – the time or cost savings potential or the potential increase in revenue associated with solving the pains we have identified.  A business case is incomplete without this.  It is easy to gloss over this in the excitement of imagining an app solution, which is why the App Roadmap Workshop is specifically designed to maintain this discipline – we need to know the value proposition before determining the solution.

Once we know the value proposition we are in a position to move from problem to high-level concept.  This is often easiest to do by drawing from apps familiar to the audience, identifying both similarities and differences that we would expect to see. 


4 – Provide the Solution

With a high-level concept and a quantified value proposition, we are ready to brainstorm the solution.  The goal at this stage is to determine what an app would do for each of the pain points identified.  At this stage, avoid over-thinking whether the solutions are separate apps or features combined in a single app.  Instead, focus on the Narrative that uniquely solves the Problem for each User with an identified pain.


5 – Determine the Product Channels

Determining the Product Channel for each app means determining which devices and operating systems will be supported and how the app will be distributed to users.  For web apps, we need to define the internet browsers that will be supported based on the target demographic or based on insights from IT.  For enterprise iOS apps distributed through a Mobile Device Management (MDM) platform this will require an Apple Enterprise Developer Account that may take several weeks to secure – do not delay this process.  Android, iOS, and Windows consumer apps each have a unique consumer marketplace with their own policies for content and distribution as well as unique marketing requirements (description fields, screenshots, etc).  Regardless of which channel is right for the solution to the problem, add to your to-do list to look through the policies, terms and conditions, and Human Interface Guidelines for that channel.  If your personal device or browser is not the product channel for your target market, be sure to look up a few “Top Ten Best Apps” and “Top Ten Worst Apps” to get a feel for trends in design and performance.


6 – Revenue Streams

The next step in the Lean Canvas method is determining revenue streams for the product.  In the consumer mobile app marketplace this is often referred to as “monetizing” and may be a combination of selling a paid app, using in-app purchases, making space for iAd, sponsored content, or selling data that is collected.  When planning web or mobile apps for the enterprise, the App Roadmap Workshop looks at how much cost or time savings or additional revenue (of the potential identified at the Unique Value Proposition stage) can likely be captured by the business given the possibility.  This is part of an overall Balanced Scorecard that ranks the apps the business has identified in order of Return On App.


7 – Understanding Cost Structure

As part of the App Roadmap scorecard, we work with clients to identify the impact of the cost structure of the business processes we will impact.  This can be done using relative estimation by rating a handful of subjective influences:  switching costs, disruptiveness to employees, cost of waiting, and timeline to capture the value created.  For example, if our goal is to improve the in-store sales process to increase revenue, we need to understand any costs associated with training employees to use the app, costs to change the layout or technology infrastructure of the stores, and the extent to which the change will be disruptive in a way that has a negative impact on revenue as the employees adapt to the new process requirements.

When planning a consumer app, fixed and variable costs associated with the longer-term product strategy are important to identify – an information website, hosting fees, product support, and ongoing development costs should all be taken into consideration.


8 – Identify Key Metrics

Because we identified the numbers associated with the problem we will solve, understand the unique value proposition, and have planned our monetization or impact, agreeing on key metrics should be relatively straightforward.  If an app is tightly focused, there is typical “one number” that we want to move and a few numbers that we are certain contribute to our goal.  Secondary metrics are important because our primary metric is often a trailing indication of success or failure and is therefore difficult to use for short-term planning.  For instance, if the “one number” is increased quarterly revenue, the impact of new features may not be represented for several months.  Secondary metrics like increased traffic conversion, increased items per sale, and increased revenue per sale may provide insights more quickly.  

While the business case metrics identify the how we measure success or failure of the app itself, the Lean Canvas method can be repeated on a per-feature basis to prioritize Epics on the app roadmap.  Key metrics at this point are typically called “analytics” and focus on the impact of any given feature on the user.  This may include a combination of time-to-completion, time per screen, crash-free users, and user-provided subjective ratings (i.e. 1 to 5 stars).


9 – Competitive Advantage

While identifying revenue streams or process impact and establishing the key success metrics for an app allows us to prioritize and understand feasibility, identifying “unfair” or competitive advantage is essential for determining how to sustain long-term margins.  At this stage, a Five Forces or Resource-Based strategic analysis can help determine how barriers to entry can be raised and also identify what quality about the new product or process improvement will be difficult for competitors to copy.

 

Porter’s Five Forces for Enterprise Mobile Solutions

Porter’s Five Forces:

In the Market Based View of competitive analysis, Michael Porter’s The Five Competitive Forces that Shape Strategy provides the seminal framework for understanding where and how a firm ought to compete.

The Five Forces are:

  1. Threat of New Entrants – The threat of new competitors entering an industry is high when initial cost, in time or money to enter an industry, is low.   Common barriers to entry are:
    1. Learning Curve Disadvantage – A landscape in which only an expert can compete and training is either restricted or difficult to obtain.
    2. Economies of Scale – In an industry that compete based on price, businesses that have grown large can drive down operational costs and leverage their market influence against suppliers.  Firms competing on differentiation may also take advantage of Economies of Scale tactics to maintain margins and process repeatability.
    3. Technology Protection – In many industries, such as pharmaceuticals, the cost to do business requires Intellectual Property or significant investment in operations technology that must occur.
  2. Threat of Substitution – The threat of substitution is high when a product or category outside the industry could fill the demand for a good if supply were short and prices too high (e.g. if coconut water prices triple, bottled water could play the substitute role).
  3. Supplier Power – The threat of supplier power is high when there is resource or information asymmetry.  This is especially true when a consolidated mature industry is the supplier for a fragmented industry with no clear leader.
  4. Buyer Power – The threat of buyer power is high when there are fewer buyers than suppliers, or lower when demand is less than supply.  Any firm producing a B2B good or service is susceptible to this risk if there is extreme reliance on a single buyer, such as a chipset manufacturer that is one of several vendors for a much larger company that integrates, markets, and distributes.
  5. Competitive Rivalry – The threat of competitive rivalry is high when a market becomes saturated and homogenous firms compete based on price.  This threat is especially high when industries have players that begin engaging in price wars despite originally competing through differentiation in niche markets.

Mobile App Portfolio Strategy:

The Lean Enterprise approach to mobile solutions can take competitive strategy to the next level.  At the core of any firm, however large, a very small number of key processes are the “heart” of the value created.  Knowing and nurturing these core processes drives the competitive advantage of the firm – the output may be similar, but the throughput must become unique in the industry and difficult for competitors to copy.

To effectively compete in today’s economy, the core value creation processes must be proprietary and continuously improved.  Applying Lean Enterprise Kaizen – continuous improvement – through mobile solutions will raise barriers to entry, increase operational effectiveness, and shift bargaining power in your favor.  Pressure from each of the Five Force’s can be reduced:

  1. Minimizing the Threat of New Entrants – Investment in a mobile-first approach to Lean Enterprise Kaizen will not only raise barriers to entry against new competitors, it will also create learning curve disadvantages against existing rivals that are no longer as efficient or effective.  Read more on Lean Principles for Agile Stakeholders.
    1. Economies of Scale – As your mobile portfolio begins standardizing work, level-loading process blocks, and driving Just in Time operations, the cost of operations will drive down.  The goal will be to reach Minimum Viable Production – doing more of the high-margin activities that differentiate your organization while standardizing the work, focusing the worker, and reducing takt time.
    2. Technology Protection – The core processes at the heart of your competitive strategy will only provide competitive advantage so long as they remain proprietary, consistent, and scalable.  Any business has non-core processes that will benefit from off-the-shelf solutions (i.e. don’t reinvent payroll, several providers specialize in that).  By identifying a key process that can be transformed, protected, and optimized, higher revenue and margins, better leadership proprioception, and instant data access will disrupt the industry in your favor.
    3. Learning Curve Disadvantage – Although adoption rates for mobile devices has never been higher and companies everywhere are investing heavily in mobile, whether responsive or optimized web, native apps, or hybrid, very few companies are focusing on process transformation and even fewer on proprietary enterprise solutions.  This gives a multiplicative affect to the competitive advantage driven by an enterprise app portfolio:  competitors will need to learn what you do differently, how you built an enterprise app portfolio, and adopt a prioritization of disruption and transformation just to keep up.  
  2. Minimizing the Threat of Substitution – Threat of substitution is minimized through differentiation and quality assurance.  To the extent a product or service is perceived as unique and consistently valuable, the price elasticity of demand can be manipulated in your favor.  Mobile apps can facilitate the role of your core processes to this end:
    1.  Differentiation – streamlining processes that impact consumers will set you apart as an early adopter.  Maintain direct communication, make data instantaneous.  The consumer is becoming more sensitive to time-to-gratification.  Mobile solutions can remove every time a consumer-facing employee turns their back, puts a user on hold, or walks to a back office.  This turns sales reps into consultants, fully empowered to get the right product in the consumer’s hands with minimal time, confusion, or hassle.
    2. Quality Assurance – For both internal operations and consumer interaction, mobile solutions establish an intuitive guided workflow that standardizes the work to be done, focusing interaction on small batches of the overarching process.  Through Business Intelligence analytics driven by the application itself, key insights into bottle necks are simple to find.  Furthermore, when kaizen and “standard work” are facilitated by the tools built to make the employee’s work faster and more enjoyable (rather than a process document and managerial oversight) updates to the core process are implemented as part of updates to the app portfolio.  This is more than MDM version control, it is version control for process transformation.
  3. Minimizing the Threat of Supplier Power – The threat of supplier power is high when there is resource or information asymmetry.  Real-time data, and becoming a firm that demands it, shifts this balance.  You will have the freedom to determine whether you “put all the cards on the table” or maintain an information asymmetry of your own.  Knowing yourself and your suppliers with real-time data as it impacts your core processes will keep supplier power over resource prices at bay.
  4. Minimizing the Threat of Buyer Power – Unless you have exclusive access to a resource or protected rights to intellectual property, the only way to reduce the threat of buyer power is to diversify your revenue stream across a larger portfolio of consumers, whether product or service, B2B or B2C.  If your current buyer portfolio is skewed to a small number of large purchasers, streamlining your core processes, standardizing the work, and maximizing (operationally efficient) differentiation will provide a repeatable, scalable business model.  If you’re contractually obligated not to serve additional buyers, process improvement efforts should focus on heijunka (level loading) and delayed differentiation.  The ability to maintain operational efficiency despite the ebb and flow of suppliers and buyers will insulate against the threat they pose.
  5. Minimizing the Threat of Competitive Rivalry – Direct competition through pricing wars kills margins industry-wide.  To any extent “coopetition” can occur, margins can remain healthier for everyone.  Each player positions themselves in the industry such that they compete for a specific market – Player A competes for the price-sensitive, Player B for the luxury experience, Player C for a reputation for the highest quality.  Across a large geographic region, these three strategic positions can be focused territorially.  Every mobile app in your portfolio is a tool with a specific purpose.  Every tool has one number that defines it:  Gross Revenue, Conversion, Items Per Ticket, EBITDA.  Mobile app solutions need to maintain laser focus on the strategic position you intend to maintain and the one number that indicates if your solution is succeeding:
    1. Competing on Price – Whatever your industry sells, part of the market skews more price-sensitive.  If your position in your strategic landscape is focused on low costs, your focus for mobile enterprise solutions should focus increasing operational effectiveness.  The goal is to maintain current price and revenue increasing gross margin. This is especially true if your industry is already in a state of no-growth, zero-sum competition.
    2. Competing on Quality – Every product or service has quality as a perception of value created.  For a car, this may mean low maintenance or high safety ratings.  Competing on quality is one form of differentiation and pricing should be higher than price-based competitors.  Mobile solutions for these enterprises should focus on real-time analytics, providing transparency to management and the market into actual quality scoring.  This “dashboard” is really a marketing tool, whether it is aimed at your executives, investors, or consumers.  The other side of this solutions should be process analysis and notification, making any part of the workflow capable of automatically alerting someone that quality is at risk.  For more on the fundamental principles of “autonomation”, the Toyota Production System is the best introduction.
    3. Competing on Luxury – Every industry has conspicuous consumption.  For products, these are the premium buyers and early adopters.  For services, this is the “concierge treatment”.  Typically, you’re combining both tactics when competing on luxury – creating the most pampered experience for the luxury consumer.  Mobile solutions in this enterprise space should focus on enabling maximum attention to the consumer, and assist in consistency of the consultative nature of the employee workflow.

Conclusion

This high-level overview of how to apply Porter’s Five Forces to your plans for Enterprise Mobile Solutions should be a conversation starter.  If you specific questions about your industry context, target market, or what custom enterprise solution would be right for you, reach out at AndrewThomasKeenerMBA@gmail.com

Applying Lean Kaizen to your Enterprise Mobile Strategy

Kaizen:

Kaizen is a Lean principle that lays the foundation of choosing the right enterprise mobile application solution.  Loosely translated from Japanese, kaizen means “change for the better”; but this principle is bigger and bolder than tacking on an improvement to an existing structure – it is the process of continuously breaking down a process, removing unnecessary effort or waste, and rebuilding as a more efficient and effective process.  In custom enterprise application consulting, kaizen underpins the process we follow in finding the right enterprise workflow that is both proprietary to an organization’s competitive advantage while also a source of waste.  Because this seems contradictory, companies rarely ask for the application that will make the biggest difference to their organization.  In fact, the need for mobility-based kaizen is not always an easy concept to see without an outside perspective.  When a unique process is driving so much success it is often assumed untouchable and treated as though infallible.

The fear of change in an organization is powerful, especially when combined with an “If it ain’t broke don’t fix it” mentality.  Unfortunately, operational effectiveness is not strategy and either a) your competitors will overcome the learning curve disadvantage and adopt your workflow or b) a small tech-savvy startup will render the proprietary workflow irrelevant.  Adopting a technical solution to maximize your unique process will give you a proprietary edge that will not be easily copied.  Adopting an innovation mindset as a strategic position will put you permanently ahead of the pack.

So how do we find the right enterprise mobile application, even more so build a portfolio of application programs?


The 3 Gen of your Enterprise:

Lean consulting begins with finding the 3 Gen or “actuals” of your enterprise.  Kaizen is impossible without direct insight into the organization, so the three “actuals” are key in finding the right application that can succeed big and drive the adoption of innovation and mobility as a competitive strategy:

  1. The Genba – By visiting the Genba or “Actual Place” where business is done, products are built, revenue is generated, an enterprise solutions consultant can view and understand the operations that create revenue, whether in a factory, a medical facility, or a sales showroom.  Through first-hand observation, rather than conversation, so much more can be learned about what an organization does, how it is done, and why it is done.  Whiteboards and conference calls can never convey the real heart of an enterprise, the “What’s the point?” or the “What’s it worth?” so coming to the actual place is critical to building out XP User Stories that speak to the pain felt by people performing the work on account of the inefficiencies they will otherwise protect out of a fear of change.  The employees, as users, must capture real value in order to drive higher revenue and operational cost savings.
  2. The Genbutsu – If possible, a great consultant doesn’t just watch, it is even better to directly interact with the genbutsu or “Actual Thing” – the real equipment being moved throughout a hospital or the customer “hand-off” artifacts.  In Lean Manufacturing, this often focused on the actual parts being assembled, the path those parts travel in a factory, and finding ways to simplify repetitive motions, reduce unnecessary travel distances through better placement of the work stations, or reducing the complexity of a step in the process by changing the order in which pieces were added to the whole.  In enterprise mobile solutions the “actual thing” is often information and the path it takes before and after that information becomes data and drives actions that produce revenue.  Information is easily decontextualized, so minimizing context-switching in the information-data-action flow is critical.  Mobile solutions drive context-awareness that turns social information into actionable data immediately and cuts out waste.
  3. The Genjitsu – Jitsu is an art, skill, or practice, a word that evolved etymologically from the characters meaning “a step along the middle of a road”.  As a Lean consulting concept, this means we must grasp the “actual situation” as it pertains to one process as a step in an overall flow.  More importantly, we must quantify the reality as objectively as possible, separate from emotional responses due to ego, social status in the organization, or feelings of blame.  We do this by obtaining data, making hypotheses, documenting workflows, and validating assumptions.  The goal is to not only make a well-informed decision about the most valuable application that can be created, but to validate the features that will be part of it.

Once the three “actuals” are known, sources of waste can be objectively identified, solutions crafted and prioritized, and a Minimum Viable Product is determined.  For more details on delivering a Lean MVP, see my post Lean Startup Principles in Custom Application Development to see when to release and when to pivot.