Find Research
Our World View
Industry Perspectives
Research Program
Parallax View Magazine
> stay tuned
View our collections of research around key subject areas:
Best Practices Epiphany - A Case for Managed Services

Are they best practices if we don't ever implement them or if 'practices' erode?

Full Article Below -
Untitled Document

Best Practices have haunted companies for two decades. The term came into vogue in the 90s along with core competencies. Guilty as charged, we have been researching these, participating in working groups (ESCACSCMP Process Standards, SCORE, VICS/CPFAR, ISO and so many more) for a good part of our careers.

Practices Are in the Doing

Recently I was sitting through a presentation from a major (really major) global Fortune 100 company, talking about how they are in a working group with other firms from 'the club of the best companies,' who have been 'built to last' supply chain leaders, etc. etc., and one very senior leader was talking about the lack of presence of 'best practices.' I was nodding in assent, yes this has to be done, has to automated, has to be measured, has to be processed... or so the story goes.

My mind suddenly challenged me—if this is best, why have so few, even the richest, implemented so little? Why was that? We did ask. (See Figure 1)  And in research, the fact is that we ask these types of questions all the time.

Figure 1Source: 2010 Supply Chain Prioirites

I also googled for the fun of it, and of course Oprah came up, to answer this question: Implementation, change, why is it so hard? It took too long in that article to get to the interesting part, which is on page 2.

Why do we have problems changing? It‘s the dopamine, the article declares, brain chemicals, which are favorable or unfavorable to change.

Oprah goes on, “But my big question... is this: How do you get yourself hooked on something that's not inherently pleasurable to you—like living on salads and broccoli or, in my case, exercising? Many people get a natural high from working out. I, however, am not one of them. Isn't there some way to trick the dopamine system? ... Some way to fool my brain into craving exercise?"

"Sure", she says: "The secret is thinking up rewards. My payoff for working out could be a pedicure or a new pair of shoes. For someone trying to diet: Maybe you get a massage after a week of good eating, or have a friend dole out gift certificates if you stay on track. Giving yourself rewards for a behavior engages the dopamine system so your brain will associate the positive outcome with it, which will help you form the habit." (Underlines by ChainLink)

So, organizations are not about to create 'business dopamine,' as indicated by our survey, above, to create the motivational and reward systems to get people to do what is best for them and the organization. In this economy, we see only a few organizations that are truly employee focused. I took an in-person audience poll recently and asked how many of their companies had employee training programs. Out of ~250 in the audience, about three hands went up. And how many in the audience had been to training in the last 6 months? No hands went up.

We Have Been Talking About It for a Decade and We Are Just Not Going to Do It

Now to the key point. There are some things that organizations are quite good at, but over time it truly appears that there are huge gaps in what is required for excellence in process and 'just getting by.' And if you have fallen behind, or have a huge distance to traverse to achieve the long term goal, it becomes less likely that the organization will ever achieve these goals. Achievement includes sustained change. That said, we have seen some organizations driving change. This happens in several ways:

  • Business simplification and complexity reduction
  • New management
  • Getting help, i.e. Outsourcing or in IT/ terms Managed Services.

A Case for Managed Services

In our recent research we asked people if they were 'outsourcing' or would want to outsource part of their business process activities1 in Supply Chain, the front office type of work. Responses were quite interesting:

First, at lower levels of the organization, it was initially perceived as a threat, until you walked the process a bit, with them. Turns out there is a lot of ‘icky’ work that people are struggling with and would like some help with, or just not do at all.

Second, the more senior we went, the more open respondents were to services. Responses varied from:

  • We do some already
  • I could really use some help, and they were specific about areas. 

And third, “We got so good at a particular process, that we now offer that service to our customers or suppliers.” We saw many examples of this creative response to big trading partner challenges. So there are other rewards for excellence!

We also talked to lots of solutions providers. We all know the model, tech companies must 'go home' after the initial implementation. And that is when users actually start to have the problems. Like our Oprah story above, the first 10 pounds are the easiest; the real danger is later on, as progress becomes harder or false confidence builds.

Figure 2

Many tech companies are under the false notion that their software to services ratio is the all important, especially for Wall Street. But financial investors are much more sophisticated in their analysis of companies and their business models and performance. The real issue is the clarity of your model, and do you consistently perform to that model; and then how profitable is that—how much cash does it generate?

With many tech markets flat, solutions providers need to find new ways to reach their customers, and offer new services to gain more revenue from them through new services or renewals. And the good news is that your customers, in many cases, want you to do this!

If you are a tech company looking for growth, I encourage you to reach out to me on this issue.



1. Not product handling, logistics and manufacturing.

To view other articles from this issue of the brief, click here.

MarketViz powered.