WHY CHANGE FAILS

An incredibly high percentage of changes introduced in business organizations do not reach their full potential—that is, do not reach full implementation or do not produce the benefits envisioned by their sponsors.
Changes that fail usually do not fail because of technical reasons— something inherently flawed about the change itself. They usually fail because of human reasons—the promoters of the change did not attend to the healthy, real, and predictable reactions of normal people to disturbances in their routines.

Change

These failures create large losses of time, productivity, and morale. They also undercut the legitimate business objectives that the change was meant to engender. For example, one manufacturer attempted to replace several disjointed software systems with one integrated enterprise resource planning (ERP) system. Because of poor project management, the user community was insufficiently involved in the planning stages, and the project failed dramatically. Opponents then said, “Told you, we just can’t do an ERP in our business.” In fact, having an ERP was a great idea. The project failed because of poor change management practices, and it took years for the organization to recover and install an ERP successfully.

This human tendency to want consistency—to resist change—is actually healthy, in the balance. Without consistency, life would fall out of control and into chaos. We would be unable to predict people’s behaviors or establish our own routines and positive behavioral patterns. Thank goodness for the steadying force of our own behavioral inertia.

However, this same steadying force can work against us when we try to introduce a change. People tend not to want to deviate from behaviors that work for them.

Why do they not want to change when the need for change is so clear to you? It is precisely because the need for change is not clear to them. It is often said that people don’t resist change so much as they resist being changed. So your job is clear: in a nutshell, you have to explain why the affected people should want to change. You have to convey the same understanding and enthusiasm that you and your team have.

You have to cultivate readiness, not resistance.

Marketing Communications Designed to Increase Customer Loyalty

The purpose of marketing communications has traditionally been the acquisition of customers, not the retention of customers. We discussed earlier that while traditional marketing communications influence brand image and thereby influence loyalty among customers, this is an unintended effect, as those advertisements are usually designed to acquire customers. But this suggests a question: should some marketing communications be designed specifically to increase the loyalty of existing customers?

In some business-to- business industries, this has been done for many years. Indeed, communications vehicles (company magazines, newsletters, and company videos) aimed at current customers have been developed especially for this purpose.

But this idea is new in many business-to- consumer categories. It would seem to warrant consideration, at least. One reason is that research has found that customers of a given brand tend to be more attentive to that brand’s advertisements than noncustomers.

This raises the question of what the content of such communications should be. Should it be the same as that for noncustomers? Certainly, the communications should support the image of the brand the company is trying to maintain. That said, one of the reasons for customers’ greater attentiveness to the company’s marketing communications is that they are unconsciously trying to obtain confirmation that they made the “right” choice.
Given that, perhaps a company should use its marketing communications to meet this desire. Such marketing communications would need to focus on the rational or functional benefits of the product/service.

In the case of consumer services, a company may want to consider using the communications to remind the customer (consciously or unconsciously) of how the company’s service satisfies the human needs we discussed ear-lier (security, self-esteem, justice). I do not know of any companies that have used these strategies in designing marketing communications, but they do seem reasonable.

As mentioned earlier, marketing communications vehicles targeted at current customers have been used in business-to- business for years, but are now sometimes being used in business-to- consumer settings. Some companies that collect their customers’ contact information send them fliers and catalogs.

WHAT IS (GOOD) INNOVATION?

Innovation is ‘hot’; it has a prominent position in many strategies and within many core values of organisations. These days, many organisations therefore regard innovation as the way of distinguishing themselves from their competition. The result of this is that many conventions, a considerable amount of research and numerous publications address the topic of innovation.

However, the word innovation is an umbrella concept and its proper interpretation is absolutely necessary in order to address this subject in a focussed manner, otherwise it will continue to be an umbrella concept. It is for this reason that we have adopted the following definition of innovation: Innovation is the development of new and practical ideas, combined with successful implementation (Von Stamm, 2003).

Innovation can be divided into a number of categories, namely:

  1. Product innovation: development, improvement and marketing of new services and products
  2. Service innovation: changes to the way in which services and products are sold (for example via online channels)
  3. Process innovation: changes to the way in which products are produced and services are delivered (for example more efficiently, more flexible and/or more customer-focused)
  4. Business model innovation: the (re-)configuration of an organisation or part of an organisation (issues can relate to the areas of chain integration, (out)sourcing, mergers and acquisitions as well fundamentally changing the structure, the processes and the way of competing in a business sector)
  5. A combination of the above

For each type of innovation the outcome must be innovative, it must be implemented successfully (otherwise it just remains an idea) and it must have demonstrable added value for the organisation and preferably, in our opinion, for the customer. Because innovation ensures a competitive edge it is vital that organisations develop and launch new products quickly and successfully (Tidd, Bessant & Pavitt, 1997).

Brand Image on the Customer’s Experience

To paraphrase a definition by Aaker (1991), a brand is a name, term, or symbol intended to identify the products or services of the seller and to differentiate them from those of competitors.

The definition of brand provided earlier contains the phrase “differentiate them from those of competitors.” More is meant by “differentiation” than simply preventing shoppers from mistaking the product of one company for that of another. A brand also gives the consumer a reason to buy one product instead of another. It does this by adding something intangible
to the purchase, ownership, or use of the product. That “something” may be perceptions about broad functional benefits of the product, such as overall quality, or it may be emotional benefits (for example, security, increased status, or meeting the need to nurture).

These benefits are conveyed by brand image. Brand image has traditionally been thought of as a method for acquiring customers, but it also influences current customers. Consider the following:

  • An image of overall quality will make an owner more satisfied with a product. This effect is even greater if the product is such that its quality cannot be fully evaluated, even by the user. Home heating equipment is one example of this.
  • If a food brand has an image of being healthful, the satisfaction of health-conscious consumers will be increased.
  • In some product categories, if a product has an image of being for a certain type of person(for example, sophisticated or successful people), customers who want to be members of that group will increase their self-esteem by owning that brand.
  • If a restaurant has an image of being family oriented, the satisfaction of some patrons will be increased.
  • In business markets, purchase of a name brand provides the emotional benefit of security, as illustrated by the advertising statement, “No one ever got fired for buying IBM.”
  • In business markets, an image of being technologically advanced is important for industries in which the pace of technological change is rapid.

Traditionally, companies in most product categories have relied primarily on advertising to establish brand images. In the case of an emotional benefit, a common strategy is to have advertisements consistently depict a certain type of person (for example, a financially successful person) enjoying a commensurate lifestyle and using the brand. Because of those advertisements, a person who wants to be a member of this group (financially successful people, in this example) will mentally associate the brand with the group, and owning or using a product of that brand will increase his or her self-esteem.

A company decides which images it should associate with its brand on the basis of a brand positioning study. Formally stated, the purpose of a brand positioning study is to identify a distinct and valued place in the consumer’s mind that is not currently occupied by a brand. After this place and the brand images defining it have been identified, the company designs
its advertising to convey those images, and it designs new products or modifies existing ones so that they are consistent with those images.

Empathy

As is the case in other human endeavors, we sometimes overlook the obvious.
One such instance here is that service employees who have direct contact with customers should empathize with customers. This is especially true of service channels or customer contact points designed to resolve customer complaints. In the context under discussion, empathy has the following ingredients:

  • Being friendly
  • Being aware of the customer’s feelings
  • Caring about the customer’s feelings
  • Caring about the customer and meeting his or her needs
  • Affirming that the customer’s concern or feeling is valid, in the case of problem resolution
  • Owning the problem

This is very different from the common practice of dealing with customers in the same way that a farm worker manages the movement of cattle.
How can the company get its employees to have (and show) empathy? One method is to show employees videos of service experiences (actual or mock) in which empathy is and is not expressed. A video, as opposed to a written description, is needed because a substantial portion of communication (by both employees and customers) is nonverbal: eye contact, tone of voice, facial expressions, and body language.

Notice that this has implications in the hiring process. While it is true that some employees can be trained to exhibit more empathy than they actually have, this is possible only up to a degree, and even that effect may be temporary. Consequently, the company needs to hire people who are predisposed to empathizing with customers. This reminds us of the saying,
“No type or amount of training can get a cat to bark; if you want barking, get a dog.”

The Golden Rule: Do unto others as you would have them do unto you.

Business and Process Metrics

What do you measure in your business? You probably use a number of metrics, which may include some of the following:

  • Inventory levels
  • Aging of inventory
  • Profits and losses
  • Cost of goods or services sold
  • Return on investment

As you get more and more into Six Sigma, you’ll need to supplement these overall business metrics with metrics related to the performance of the processes you’re trying to improve, such as:

  • Cycle time (an important indicator of process speed, which is often a key competitive factor)
  • Percent of final products or services with defects or the number of defects per product or service
  • Hours required to produce a certain number of outputs or provide a service
  • Customer satisfaction (extent to which products or services meet customer expectations)
  • Yield (amount of acceptable goods or services relative to the total number produced or delivered)
  • Cost of poor quality (a concept we’ll cover in a later)

If you haven’t set any metrics, I’m surprised you’re still in business!

How have you made important business decisions without data? Have you relied on your intuition? Have you just guessed?
Imagine for a moment that you’re a surgeon. You are in the operating room, about to operate on a man who is suffering from abdominal pain. But you haven’t run any diagnostic tests, you haven’t asked the patient any questions, and you don’t have his previous health records. What do you do? Do you take a wild guess that he has appendicitis and just start cutting? Of course not!
Just as a physician uses information to diagnose an illness before beginning treatment, Six Sigma uses metrics to help you identify areas (processes) for improvement.

I cannot emphasize to you enough that, as a small business owner or manager, it is absolutely imperative that you track the progress of your company!

Defining Quality for Small Business

Quality for the small business doesn’t mean the same thing as for a large organization. Why not? Well, the key difference has to do with size. A large company, with a variety of products or services and lots of resources(like cash), can sometimes afford to provide its customers with less than high quality and still stay in business.

For example, there are big retailers that offer a wide variety of quality goods at competitive prices, but provide poor customer service. Regardless, consumers continue to shop in their stores because of the low prices— they’re willing to put up with poor quality service to get those prices.
I’ll go even further and state that customers have actually come to expect lower quality from large corporations, as long as the corporations make up for it in other ways. We expect some defects. Here are some examples to illustrate this point:
• Cell phone companies drop calls.
• Car manufacturers recall millions of vehicles.
• Home appliances need constant repairs and/or extended warranties.
• Airlines lose luggage.

When defects like these rear their ugly heads, are we surprised? Of course not. And, more often than not, these defects do not prevent us from continuing to patronize these businesses because we derive other benefits from them that mean more to us. For example, maybe your cell
phone company drops calls, but you got a great deal on it from that company.
Or, your car might have been recalled, but it gets great gas mileage.
And, although you had to buy an extended warranty on that dishwasher,
it’s the quietest one on the market. Finally, even though the airline lost
your luggage, it had the best deals on Disney vacation packages! You see
what I mean.
On the other hand, it’s entirely different for the small business. In
most cases, a small business can’t overcome defects in quality. The bottom
line: defects will slowly kill you. They will put you out of business. Do you
agree? If not, you’re in denial. If you don’t eliminate defects, your customers will go elsewhere. You can use Six Sigma to get rid of those defects
once and for all! And the fact is that maybe your competitors will be using
Six Sigma.
I have been trying to sell you on the benefits of Six Sigma. I hope I have succeeded. But before we move on to actually learning how to do it, I want you to pause for a moment and consider the human element of Six Sigma.

Six Sigma is all about identifying and fixing problems that lower costs, improve quality, and raise your bottom line. But businesses are about more than just money; businesses are people. So what are the internal effects of Six Sigma? How will Six Sigma affect your employees and your company’s culture?

What Is Six Sigma and Why Should I Care?

The toughest thing about success is that
you’ve got to keep on being a success.
—Irving Berlin

Welcome to Six Sigma for Small Business! You are about to embark on an
exciting journey that will allow you to improve your profits, uncover hidden
waste and costs in your business, eliminate complacency, and increase
overall quality and customer satisfaction.

Six Sigma has been widely adopted by American businesses because it works! I have been in the trenches implementing the Six Sigma improvement methodology in major corporations since 2010, and I have seen incredible results over and over again. You, the small business owner, can achieve these same amazing breakthroughs by applying Six Sigma to you organization.
This page is designed for small business owners and managers who want to learn how the Six Sigma problem-solving and improvement methodology can help solve immediate business problems and who are ready to take advantage of the gains that Six Sigma can bring them.

How much do you know about Six Sigma? Maybe you’ve heard of it, but you’re not sure what it is. Or, perhaps you think you know what it is, but you can’t imagine how it would apply to your small business like it has been applied at a giant company like GE. Then again, maybe you’ve never heard of Six Sigma but you would like to learn about this problem solving methodology because you want to improve your business. In other words, regardless of your level of Six Sigma knowledge, if you own a small business and want it to make breakthrough improvements in terms of efficiency, cost savings, customer satisfaction, and profitability, this book is for you.

In other words, this page is for you if:
• You want to turn your current mistakes into profit. (Note: you can’t
turn mistakes into Naira. You can however, get rid of mistakes
and realize lower costs and improved performance and profitability
as a result.)
• You want more time for a personal life.
• Your business is doing well, but you know it could do much, much better.
• You want to increase profit.
• You want to make a better product/service at lower cost with less waste and rework.
• You want to deliver higher quality services and products to your customers.
• You want to increase the satisfaction of your customers.
• You want to grow and expand your business.
• You want to maximize your employees’ contribution and increase their level of commitment.