Quash the “White Space” with Four Management Tools

You contact a company trying to get a problem solved and you find yourself passed between multiple departments. While people are sympathetic, their response is, “It’s not my job.” Despite multiple voice mails and e-mails, you get nowhere. Your issue has fallen into the company’s “white space,” the cracks between the boxes on the organization chart. 

You’ve probably experienced white space issues inside your own organization, too. People perform departmental tasks smoothly, but there’s friction interacting with other groups. Processes don’t flow. Often things get “thrown over the wall,” there’s lots of finger-pointing, and it’s difficult to get things done.  

Functional silo-ism first rears its ugly head when companies reach about 40 employees. At this threshold, companies must departmentalize to increase technical capabilities and bolster management’s span of control. But priorities slowly begin to shift. Soon pleasing the boss becomes more important than making customers happy. As the firm continues to grow, functional barriers get larger and more entrenched. Left unchecked, departmental relationships can become adversarial, paralyzing new product development, service delivery, customer acquisition, and customer care efforts. 

Four tools that reduce silo-ism 

Progressive companies deploy countermeasures to mitigate the effects of white space behavior. Top organizations combine the four management practices below to substantially diminish internal friction and dramatically increase performance. 

1. Hoshin Kanri

What it is: Developed in the 1960’s at the Bridgestone Tire Company in Japan, hoshin kanri (literally translated “a bright, shiny needle”) is a rigorous, integrated system of planning, implementation, and review that points the way like a compass needle. Caterpillar, 3M, Toyota, Bosch and Danaher and many other leading companies use it. 

How it works: Senior executives collaborate to prioritize common issues, and then decide on a single breakthrough. The objective is then decomposed into a smaller set of strategies, each featuring its own executive owner and performance measure. Leaders cascade the plan throughout the organization, finally defining implementation plans at lower levels. Formal hoshin reviews then roll up progress, allowing executives to eliminate barriers that crop up. The method’s closed-loop system promotes intense focus, relentless execution, and forward momentum. 

Why it works: Unlike the common Management by Objectives (MBO) approach, hoshin aligns the organization around business, not functional, imperatives. Leaders pass these priorities down and reinforce them across the company. As a result, teams work towards enterprise-wide goals that transcend parochial concerns. 

2. Process Mapping

What it is: A time-honored technique used to study workflows, process mapping reveals the “hidden factory” behind service work. Describing the process visually helps teams identify critical handoffs, gaps, rework loops, and queues. After pinpointing improvement areas, teams can then reduce errors, speed cycle times and reduce costs. Value Stream Mapping and Customer Journey Mapping are popular variations of the method.  

How it works: Teams define process suppliers, inputs, outputs, customers, and requirements. Then they brainstorm tasks that must be completed to convert inputs into outputs, typically using Post-it® notes and butcher paper to record the workflow. Along the way, mapping participants identify improvement opportunities. 

Why it works: Mapping allows people to see the systemic nature of business—everything is connected to everything else, and what happens in one area affects all others. People quickly realize that fast, efficient, customer-pleasing workflows trump choppy, disconnected vertical structures. Top organizations assign executives to lead cross-functional, key business processes, holding them accountable for optimizing teamwork across, rather than inside, department boundaries. 

3. Enterprise Dashboards

What it is: The Japanese call an interlinked system of color-coded metrics nichijo kanri, or “daily control.” These displays help people at all levels manage the variables that lead to favorable business outcomes. Each manager’s dashboard typically monitors the key business process he or she oversees using 8-10 essential metrics that describe volume, time, cost, quality or other attributes. 

How it works: Leaders define the critical few measures that really matter by analyzing company processes, economic models, and Value Propositions. They calibrate indicators by determining ranges of acceptable values based on stakeholder requirements, process capabilities and business goals. Managers then collect data act appropriately on the signal: “green” means everything is good, “yellow” means keep an eye on it, and “red” means take immediate action. 

Why it works: With the right metrics, managers and teams focus on the most essential aspects of the job. They keep things under control and prevent downstream chaos. At top companies, executive dashboards reflect measures tied to cross-functional processes. When reward and recognition is tied to systemic improvement, managers and employees have greater incentives to work with other teams for mutual benefit. 

4. Lean Six Sigma

What it is: Lean Six Sigma is the modern integration of two proven methods: lean production and six sigma quality. Lean (a technique pioneered by Toyota in the 1970s) emphasizes speed and helps identify and eliminate wasted time, motion, and raw materials. Six Sigma (a quality method named after an imperceptibly small error rate) aligns processes with customer needs and then reduces defects and excessive variation that causes dissatisfaction. Both have been used for years in manufacturing, and the combined approach is increasingly common in service environments. 

How it works: Teams use formal methods to characterize process performance, estimate financial impact, uncover root causes of problems, design solutions, and implement changes. DMAIC (Define-Measure-Analyze-Improve-Control) or RIE (Rapid Improvement Events) provide teams with structure and statistical tools to effectively manage projects. Since teams make systemic improvements, results tend to be more dramatic and sustainable.

Why it works: Teams are often made of up representatives from all functions involved in the workflow. By working together towards common business goals, team members learn to appreciate the challenges people face in other functional areas. Besides creating more effective and efficient processes, a broader “systems view” and stronger interpersonal bonds between people promotes greater cooperation long after the project is complete. 

White space problems are a natural part of organizational development. All companies deal with it in one way or another. Fortunately, proven tools and techniques can help young companies arrest its impact and promote scalable growth. 

CSM Performance Management Done Wrong

Managers often perceive differences in how individuals perform sales and customer service, implementing management practices that make things worse. Faced with the challenge to improve results, many establish numbers-based, “pay-for-performance” systems to reward good employees and punish bad ones. Motivating by comparing, ranking, and paying people according to their individual results just makes sense. After all, prestigious business schools and prominent corporate leaders espouse meritocracies. The “carrot and stick” approach is so widely used that it must be right. But this philosophy is flawed and counterproductive, especially in operations like Customer Success Management. Why? Supervisors wind up focusing on the wrong things and demotivating their employees.

Call centers are a case in point. Managers keep detailed statistics such as call handle time, call quality and conversion rates. Most then rank agents based on their numbers. A pep talk might sound like, “Bill, I see you are near the top on quality, but you’re only about average on your call handle time. Keep up the good work, but you need to go faster!” In addition to coaching, call centers use a variety of bonuses and awards to single out and further motivate agents, believing it’s the answer for achieving high service performance.

How well does it work? The fundamental question is to what extent performance can be attributed to the process (i.e. technology, workflow, customers, training, policies, etc.) or to the people. We studied this question examining average handle times (AHT) and quality scores (QA) for a group of 55 agents over several months. If performance was due exclusively to process factors, individual rankings would be decided by chance alone. If people factors entirely determined results, ranking would always be same, month after month.

Using statistics no more complicated than the probabilities of flipping a coin, we found that individuals played a role, but nowhere near as much as managers expected. In the agent population, only 13% exhibited non-random behavior for QA and 22% for AHT. Combining both metrics, we showed less than 6% of agents had performance that could be attributed to something other than chance. Clearly, rewarding and recognizing individuals for outcomes dominated by systemic variation was a waste of time—and many agents knew it. Management time was much better spent improving the process than motivating the people.

Surprisingly, experts have shown that reward systems can be demotivating, especially when it comes to tasks people enjoy. Psychologists classify motivation as intrinsic (doing something for its inherent satisfaction) or extrinsic (doing something in anticipation of a separable, dependent consequence). Ask people in customer service why they do the job and most will say it’s not the money but because they like helping people. In other words, service people tend to be intrinsically motivated. Years of scientific analysis confirms that virtually every type of reward that is contingent on task performance undermines intrinsic motivation.¹ The flip-side is also true—management threats, deadlines, directives, and competitive pressures also backfire. Quality guru W. Edwards Deming felt so strongly about the obstacles caused by ranking people according to the numbers that he insisted leaders eliminate it in his famous “Fourteen Points for Transformation of Western Management.”²

So does this mean employees shouldn’t be rewarded or held accountable for their work? Absolutely not! In any distribution of people, some will excel and others will struggle. Leaders must help everyone do a better job, and for statistical outliers “manage up or manage out.” But leaders must also understand better results come from better processes, and should make process improvement their primary focus. They should also set aside relative ranking and competitive reward systems, choosing instead to practice leadership and instill teamwork. And not all extrinsic motivation is bad. We found that service employees respond very favorably to team-based goals and incentives that promote cooperation and process innovation—enhancing, not hindering, their natural inclination to serve customers and each other.

And what about CSM functions mixing sales and support? In these cases, small, individual sales commissions may be appropriate, but great care must be taken to balance and clarify job expectations and goals. Many times employees view sales and service to be at odds, and for good reason: customers don't want to be "sold to," but appreciate assistance making a decision. Framing the task as identifying needs when they surface and helping customers decide in a subtle, consultative way tends to be much better received than pressuring CSMs to meet monthly upgrade and renewal quotas at the expense of good service.

Often the road to hell is paved with good intentions when it comes to performance management. With great service increasingly the market differentiator and a primary driver of customer retention in subscription-based revenue models, managers can’t afford missteps. Spending time unproductively improving service performance or lowering front-line employee satisfaction and engagement can be disastrous. Using a more enlightened approach to performance management avoids pitfalls and pays much higher dividends.  

Footnotes:

1.    Ryan, R. and Deci, E. (2000). “Intrinsic and Extrinsic Motivators: Classic Definitions and New Directions,” Contemporary Educational Psychology, issue 25, pp. 54-67.  

2.    Deming, W. (1982). Out of the Crisis, pp. 70-85, MIT Center for Advanced Engineering Study, Cambridge. ISBN 0-911379-01-0