You need just enough to keep the machine humming, but add too much and you have a hot mess.
That’s the advice I give my clients when we map their customer journeys. During our sessions, cross-functional teams define ideal customer interactions, examine the workflows required to deliver them, and uncover and eliminate barriers standing in the way. Invariably, companies fumble critical handoffs, resulting in inefficiencies and frustrated customers. Often just a little more discipline, such adding a well-placed checklist, is all that’s needed to achieve a better customer experience.
But many bristle at the thought of adding structure, and entrepreneurial CEOs are the first to object. Many began their careers at giant corporations and felt stifled by the bureaucracy. They saw firsthand how risk-averse managers accrued a preponderance of inspections, approvals and red tape to prevent any possibility of failure. This led to a dearth of imagination and agility, and the systematic smothering of new ideas. Vowing their organizations would be different, these executives left and started their own ventures, espousing free-wheeling innovation over deliberative action.
Lessons learned
Contrary to widespread belief, however, young companies actually accelerate growth after they adopt formality. Researchers at the University of California Berkeley studied 78 early stage companies and discovered that firms implementing good processes expanded three times faster than those that didn’t.[1] They concluded that in order for start-ups to grow beyond fifty employees, founders must create structures to scale operations beyond their personal spans of control. Failing to deploy a distributed management system in several cases led to a leadership crisis and a change in the corner office.
Many subscription-based companies learn the hard way that doing things right the first time impacts whether customers repurchase. In a world where software is easy to replicate and competitive barriers are few and far between, customers can easily switch. They have little patience when tech providers deliver poor experiences, causing many to go elsewhere at contract renewal time. At SaaS firms, structures that promote high quality and consistency across the enterprise quickly become essential for retaining customers.
Cause and effect
When business leaders critique their customer-facing processes, they realize most headaches are preventable. Staff members often lack information at critical phases, leading to confusion, lack of coordination and rework downstream. Organizational seams are often to blame. When upstream employees appreciate the importance of collecting key data and use simple mechanisms to capture and share the essentials, the customer’s journey becomes smoother and more efficient.
Surprisingly, structure also helps us humans break down complex processes into manageable, bite-size chunks that we can perform automatically. If we streamline our work into a set of simple rules, we can take advantage of our hidden brainpower. Repeating simple, mundane tasks leads to habituation. Just like driving to work and being unable to recall the specifics of the commute, our subconscious naturally takes over routines, freeing up our consciousness to ponder the more important things. When we do the same with workflows, high performance simply becomes a matter of muscle memory.
Lubricating the gears of business
Of course, too much of a good thing can be a bad thing. Well-intentioned managers at early stage companies sometimes overdo the controls, creating a level bureaucracy their founders loathe to repeat. Too much structure emerges when managers attempt to remove all friction, losing perspective on the frequency of certain problems and the risks they incur. Pareto’s Principle, however, offers practical guidance. Using the discipline, managers can resist their impulses and deploy process controls only in the 20% of the areas that cause 80% of the issues.
When it comes to structure, CEOs must strike the right balance. Too little motor oil makes the engine of commerce break down. Too much causes a hot mess. Leaders must add the right amount and regularly check the dipstick as their business motor revs up, making sure there’s just enough oil in the pan.
Source:
[1] Davila, A., Foster, G., and Jia, Na. (2010) Building sustainable high growth startup companies: management systems as an accelerator. California Management Review, vol. 52, no. 3, pp. 79-105. University of California Press.