Wednesday, January 16

The reductionist flaw at the heart of Lean

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In the first part of this series on Lean and its impact on customer experience we examined basic evidence that supports what could be construed as an outrageous claim that most Lean service programmes don’t deliver much value to the customer.

In the second part we expand on this and examine how reductionist thinking patterns create behaviours where the customer becomes almost an afterthought.

Understanding reductionist thinking

I have encountered reductionist thinking many times in my career and repeatedly observed change implementation followed by change successand cost base improvement. The cost base improvement proved short-lived and the company found themselves in a worse position than previously.

Let me illustrate. A few years ago, I was working in Australia and I needed to be at a client’s offices in Brisbane for a number ofweeks. I wanted a reasonable quality hotel with a gym and swimming pool within a 15-minute walk of where I needed to be. Jumping onto Expedia, I quickly found a hotel that fitted the bill. In fact, it looked fantastic. The couple at the check-in desk wore Hollywood smiles and the husband had biceps the size of treetrunks. The bedrooms featured supermodels drinking Bollinger Champagne all in a state of relaxed bliss. Do you know what? I almost fell for it. As my hand hovered over the buy button, I reminded myself that I should check the review sites.

The reviews were terrible – threadbare carpets, scuffed and dirt on the walls, insipid drinks in the bar, queues to wait for everything and one review mentioned cockroaches in the bedroom. What do you think a customer facing this sort of reality was going to do? Run a mile – and I did too.

I remember going back to Australia and heard the hotel had changed hands and made the point of meeting the new manager who told me exactly what had happened. As the hotel’s performance figures fell closer to loss, they decided to assign consultants to identify initiatives to quickly improve performance figures. They carried out a performance impact review and decided on two immediate initiatives:

  • Cut as much waste out of the cost base as possible
  • Attempt to increase room utilisation rate by extra marketing plus deals and then creating extra revenue via other products and services in the hotel.

In truth they recommended a refurb but concluded that was part of a longer-term play with little expected impact for at least a year.

Marketing initiatives dropped the price of the room by an average of 20% and money was spent on better brochures, glossier website etc. This was countered by an increased number of menu options and cocktail happy hour specials.

The staff numbers at the hotel were cut. The hotel found cheaper suppliers both in the restaurant and the bar. Remaining staff were placed on higher productivity targets.

The immediate impact appeared to show success. Room utilisation initially rose by 10%. The cost base reduced by 20% and profitability, which at that stage was poor, increased by a staggering 200%. The consultants left with accolades and great testimonials for helping quickly turnaround the basis.

Except it did not last. In fact, it lasted 2 months then performance figures fell away so quickly the hotel fell into loss.

This is the curse of the reductionist:

  • Room prices may have reduced for deals but a room which was 120 AUD per night and reduced to 99 AUD is hardly going to be attractive if reviews complain about cockroaches in the bedroom.
  • The reduced staff numbers with higher performance targets were so busy doing their functional work the customers became almost an inconvenience.
  • Cheaper suppliers meant the quality of the food in the restaurants and drinks in the bar dropped. Customers quickly realisedthey could do better elsewhere.

When a story is played out like this the answer is obvious.In fact, many change practitioners would claim “we would never think about change this way”. Except they do. Regularly and repeatedly. The waste, cost and other issues can be driven out of a process, but the customer is all too often left as a minor component in the change program. The result is the initial problem may be solved but customer experience levels are also reduced.

Revenue lags improvement in CX

Customer experience is directly related and usually proportional to revenue but revenue impact lags CX improvement

In this case study, the overall customer experience took another dip even though the cost base was changed. This is akin to giving paracetamol to treat a brain tumour – the pain goes away for a short space of time, but real challenge has never been resolved – or in fact identified.


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In the final part of this seriew we will examine what BPM and Lean Practitioners should do differently

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About Author

Founder & CEO. Charles is an acknowledged leader in customer-driven performance change using both best practice and emerging next practice perspectives. He leads, mentors and coaches in both strategic and operational initiatives. A strong believer is the potential for "supercompany performance" he innovates using next practice thinking and methods to enhance the business. He researches heavily to retain his reputation as a thought leader, which he has applied across 40 countries, multiple sectors and companies such as Citibank, Nielsen, Microsoft, Vodafone, Tracker and governments in Middle East and Asia. Contributes to business journals and often invited as a speaker or chairman to events all over the world.

2 Comments

  1. With all respect for your cross-discipline thinking, I think you have the straw man problem. Nothing about the work of the business considered the end customer, so if it was Lean inspired, it was Lean gone wrong.

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