ROUNDMAP_RoundTable_2000_shutterstock_1120985537

© 2014-2019 Edwin Korver, CEO Tenfore BV – all rights reserved – MOBILE +31-(0)6-52341111
Registered at BOIP.INT i-DEPOT 094029 (3.0), 095482 (3.1), 103610 (3.2), 105496 (3.3), 106619 (3.4), 110465 (3.5), 115384 (3.6)

DRIVING CUSTOMER EXCELLENCE

ROUNDMAP™ is an integrated framework of the Customer Dynamics* to help achieve and
even exceed the firm’s desired outcome
by driving customer excellence.

ROUNDMAP™ is a creation of Edwin Korver, CEO of CROSS-SILO CUSTOMER INTELLIGENCE

To be successful, a company needs to build a culture of trust, honesty, transparency, consistency, commitment, and accountability, while ensuring effective communication between separate teams and departments, in order to deliver personalized customer experiences to forge strong customer bonds.

ROUNDMAP_Trajectories_Outcomes

However, today’s business enterprises are exceedingly fragmented due to the distribution of specialist tasks, causing mental and organizational silos, tunnel vision, internal competition, and in some cases even turf wars, which tend to obstruct the delivery of value, ultimately deteriorating customer performance.

John P. Kotter, Emeritus at Harvard Business School: “Any company that has made it past the start-up stage is optimized for efficiency rather than for strategic agility—the ability to capitalize on opportunities and dodge threats with speed and assurance”, “The very structure we have created to operate efficiently and effectively today gets in the way of what we need to do to innovate for tomorrow”, “Organizations need a ‘second operating system’ that works in tandem with the traditional hierarchy, the original “operating system” that the organization depends on to get day-to-day tasks completed and out the door.”

Our method aims to repair the broken value chains by providing means to cross the silos at the Ultimate Level of Truth™ – the Integrated Customer Lifecycle™. This is where opportunities emerge and threaths can be identified promptly. When combined with a common sense of purpose, our approach will lead to a substantially better performance (up to 765%; Kotter and Heskett, 2011).

While ROUNDMAP™ focuses on value delivery and performance optimization, other frameworks are generally cost-oriented. To increase operating income both aspects, cost and performance, need to be considered.

Customer Dynamics* is a theory on customer-business relationships that describes the ongoing interchange of information and transactions between customers and organizations. It goes beyond the transactional nature of the interaction to look at emotions, intent, and desires. It views interactions as a chain of events rather than single point occurrences. Customer dynamics is a subset of organizational dynamics, which describes how people function together to accomplish a task.

INCREASED PERFORMANCE

What to expect in terms of financial outcome from adopting the integrated approach of the ROUNDMAP™ Customer Excellence Framework?

Although the effects of the deployment of the ROUNDMAP™ methodology will depend on the specific circumstances, the authors of HumanSigma suggest that increased engagement, which is one of the goals of the ROUNDMAP, will produce results ‘that far exceed companies’ expectations’. Kotter & Heskett’s extensive research on the effects of culture on performance even showed a 765% net income improvement over 11 years (~22% YoY-growth, between 1977-1988).

Engaged Employees - 300% (Towers Watson)
40%
Engaged Employees and Engaged Customers - 340% (Gallup)
45%
Collaborative versus Adversarial Culture - 765% (Kotter & Heskett)
100%

While the ROUNDMAP™ is the go-to framework for maximizing the performance of value delivery and the customer development process, it does require certain prerequisites. To create the appropriate conditions the ROUNDMAP™ integrative framework offers an effective approach allowing the firm to transcend past performances.

THE DEFICIENCY OF SPECIALIZATION

To understand the difference between an integrated and a fragmented operation, we’ll need to explain the concepts of the division of labor and specialization, which began in the past century.

The division of labor is one of the hallmarks of capitalism. Prior to Henry Ford’s advancement of the assembly line for automobile production, cars were primarily produced by craftsmen or artisans. Every member on the team had a very good working knowledge of virtually all aspects of car manufacturing. With the assembly line, a small team of people designed the car and assembly process, while a larger team of unskilled workers built the cars.

Appearantly, Henry Ford did not believe factory workers needed to bothered themseleves with the final product and would be more than happy to do repetitive work routinely. However, Ford underestimated the effect this had on people: employee turnover rose to 370%. In 1913 he hired more than 52.000 men to keep a workforce of only 14.000. Even today, the automotive industry’s track record on hiring and retention is ‘unacceptable’.

Consequently, the Industrial Revolution brought specialization from the division of labor, which brought increased productivity. This specialization, however, decreased self-sufficiency and people became increasingly interdependent on one another, leading to fragmented structures (silos), a limited sense of responsibility and a narrow scope of awareness.

Few realize that the exceeding distribution of tasks – in an effort to drive productivity of the more intellectual and creative customer creation process – is very much comparable. To illustrate that, we’ve created the following figure:

Figure above: in both cases (left and right), employees are closely divided into functional groups and encouraged to perform highly specialized, yet repetitive jobs/tasks on an hourly basis. This causes not just functional but also mental silos, while humdrum routines create an ever-increasing detachment from the overall goal of process, i.e., the firm’s mission. If, additionally, the voice of the employee is actively being suppressed and the end result obscured, employee engagement will falter and performance will tumble.

Silos tend to obstruct effective communication between separate teams and departments, stall innovation, lower employee engagement, increase resistance to change, and thereby decrease operating performance.

THE SILO SYNDROME

Best-selling author and entrepreneur Ricardo Semler identified the negative effects of industrial compartmentalization on the level of engagement of factory workers. However, by dividing the frontline operation into separate teams and departments, we’ve adopted a similar form of siloization and as a consequence led office workers to become disengaged as well.

When interdepartmental turf wars obstruct the exchange of information, because of resentment and cynicism between teams, blocking cross-functional solutions and creating inefficiences throughout, the business will fail in its mission.

Employee disengagement will result in a lack of empathy for and commitment to a customer’s cause. Departments and individual workers become self-centered, entrenching the silo effect, and inevitably hurting the customer performance. This goes back to the business strategy: instead of tying to be the best, leading to machismo, tribalism, fragmentation and friction, we should strive for uniqueness, appealing to our creativity and our sense of purpose and meaning.

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The paradox of the modern age, I realized, is that we live in a world that is closely integrated in some ways, but fragmented in others. Shocks are increasingly contagious. But we continue to behave and think in tiny silos.

Gillian Tett, FT journalist, author of The Silo Effect

CROSSING THE SILOS

We are not suggesting to break down the silos: they do serve a purpose. We propose to cross the silos, and embrace a customer-focused, collaborative and commited mode of operation.

To advance from a siloed to an integrated customer development process, we’re suggesting to build a bridge, a fourth department: Success. This department needs to be assigned with the task to pro-actively assist customers in achieving their objectives sooner, rather than later, to raise significance.

While it makes sense to want to create more one-off customers as part of a product-centric business model to increase market share, in most other cases, provided we want the business to be(come) more profitable, we need customers to return more often and spend more money over the course of the customer relationship.

Therefore, the focus should be on getting customers to return, or at least refer. There is an extra bonus: it is at least 5x times less expensive to retain a customer and get them to repurchase, than it is to acquire a new customer.

To improve value creation and delivery each frontline employee should have access to a unified customer profile to be able to act on relevant emotions, intent and desires. Customer feedback needs to be shared continuously, preferably at a weekly Customer Roundtable, to advance from a discrete to a collective sense of achievement.

INTEGRATED CUSTOMER LIFECYCLE

Once you have the right processes and systems in place, developed a collaborative mindset based on a shared vision, and established cross-functional teams that understand the customer dynamics, then you’ll appreciate the high level of detail of the Integrated Customer Lifecycle™.

Contrary to common practice, we perceive the Customer Lifecycle not as a linear timeline or funnel, but as a cyclical double helix, consisting of 8 Moments of Engagement (touchpoints) intertwined with 8 Moments of Reflection™ (MoRe), jointly representing the customer’s journey – directed by 8 Prompts, or startingpoints.

We call it the Integrated Customer Lifecycle™ – The Level of Truth.

ROUNDMAP Integrated Customer Lifecycle Circular

We do understand a circular layout might be difficult to comprehend at first, so we’ve created a linear version as well, which might be more familiar to you (top to bottom: Moments of Reflection™, Moments of Engagement, Prompts):

man-left-to-right-black

We were able to obtain one-third of the steps of the Integrated Customer Lifecycle™ from known marketing and sales models. Complementary steps were handpicked from reading hundreds of books, expert articles and blogs.

Although Peter Drucker stated “The purpose of business is to create and keep a customer”, few companies actually have a customer retention strategy. In fact, most companies are so much focused on creating customers, incentivizing sales while cutting down on cost for customer service, that they appear not to care at all about their customer’s longterm objectives.

In essence, the Integrated Customer Lifecycle™ is a value chain of interconnected frontline specialists, teams and departments, working as one, executing on one shared vision.

Queen's One Mission

We love the making of Queen’s memorable song ‘One Vision’, as the recording so clearly expresses the devotion to and pleasure derived from working together on one mission.

STEP BY STEP

It would be naive to expect an organization to make an instant leap, from a fragmented to an integrated mode of operation. It requires a radically different mindset, involving trust, commitment, and accountability, as well as cross-departmental information systems.

However, it can be done and it is worth your effort, for it has been proven time-and-time again that silos stifle organizations, depriving stakeholders from its full potential.

“In order for collaboration to take place, managers must their silos and their perceptions of power.”

Jane Ripley, “Collaboration Begins with You: Be a Silo Buster”

REALM OF THE ROUNDMAP

To perceive the realm of the ROUNDMAP we’ve created the following slide, explaining the role of Customer Dynamics relative to Corporate Dynamics and Porter’s Value Chain.

We perceive the Customer Dynamics™ as a business’s intermediate primary activities, derived from Michael Porter’s value chain, that exist in between the back-office and the marketplace, enclosing both the business-facing (or supply-side) as well as the customer-facing (or demand-side) functions of the customer development process.

ROUNDMAP_CD

This new perspective gave us the opportunity to fit in the SWOT-model (Strengths, Weaknesses, Opportunities and Threats), as well as the Backstage and Onstage Competitive Advantages, relevant to defensible differentiation.

Another way of explaining why we divided the primary and secundairy activities in three dynamics, is by looking at the value intake, creation, delivery and capture processes of a Value Hub™ – (Value Hub™ Theory):

Image above: value creation comes at a cost (debit), largely driven by the business dynamics, while value delivery, largely driven by the customer dynamics, creates revenue (credit). The result (margin) is what we can capture from it, determined by the market dynamics.

Obviously, there are cost involved with customer dynamics (staff, advertizing, customer service, office space, etc.), however, as stated by Peter Drucker: “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation.  Marketing and innovation produce results (performance); all the rest are costs.”

BUSINESS STRATEGY

We’ve looked at the Integrated Customer Lifecycle™, the Ultimate Level of Truth™.

Now let’s have a look at strategy: on how we are going to accomplish our mission. The silo mindset does not appear accidentally: more often than not silos are the result of a conflicted leadership team.

As shown in the figure below, the Integrated Customer Lifecycle is a lateral process and as such the completion of a cross-structure top-down vertical execution of the Business Strategy. Together, they make the ROUNDMAP.

ROUNDMAP

The name refers to the cross-structure (Business Model Matrix), cross-silo (Integrated Customer Lifecycle) and cross-market execution of the business strategy.

=

ROADMAP

Including culture, values, vision, mission, addressable opportunity, priorities, business model, value proposition, and measurable objectives.

+

ROUNDTRIP

Including marketing strategy, competitive differentiation, brand promise, value proposition, customer experiences, channels, touchpoints and lifecycle dynamics.

If we start off with a fragmented leadership team, each heading a group rooted in their own culture, values, beliefs, symbols, and taxonomies, risking tunnelvision and mental blindness, the execution of the business strategy will become crippled. If departments hoard their own data, reluctant to share it with others, the mission will be at grave risk.

The way to break down the silo mentality is by creating a unified vision, work towards achieving a common goal, motivate and incentivize cross-functional teams to collaborate and co-create, and measure the outcomes continually.

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Cultivate a deep understanding of yourself - not only what your strengths and weaknesses are but also how you learn, how you work with others, what your values are, and where you can make the greatest contribution. Because only when you operate from strengths can you achieve true excellence.

Peter Drucker, best-selling author and management consultant

MAPPING COMPOSITION

ROUNDMAP™ is covering three structural levels: (1) Business Strategy, (2) Strategy Execution, and (3) Performance. In the figure below you can see how these three levels are laid out in the system.

At first glance the ROUNDMAP might look overly complex, not allowing you to see the forest for the trees, which can be discouraging. However, you’ll need to perceive it as three-in-one mapping system:

These three building blocks are intertwined: it makes no sense to measure customer performance without being aware of aspects like mission, objectives, business model, strategy, tactics, or market circumstances.

We believe you are now ready to have a peek at the ROUNDMAP.

One final remark: you deliberately designed the layout as a hub-and-spoke, with the value hub in the middle and the spokes being the teams and departments, collectively driving customers through the circular customer lifecycle.

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TARGETED AUDIENCE

ROUNDMAP™ aims to help firms, whether for profit or non-profit, that are faced with disappointing customer performance – due to siloization or otherwise – and are looking for ways to improve operating outcomes. ROUNDMAP™ suggests to focus on cross-functional collaboration, create more meaningful and purposeful value, build longer lasting differentiation, advance business modeling, and shift to proactive customer services; all leading up to increased customer loyalty.

“Customer centricity is a strategy that aligns a company’s development and delivery of its products and services with the current and future needs of of customers in order to maximize their long-term financial value to the firm.”

Peter Fader, author of “Customer Centricity” and Professor of Marketing at Wharton University.

BUSINESS MODEL MATRIX

We’ve just looked at the overall composition of the ROUNDMAP. After having created the Integrated Customer Lifecycle™, we found that the traits of two known business models, product centricity and customer centricity, correlated to a focus on marketing and sales respectively. This opened up a whole new way of thinking about business models.

By adding an extra dimension, i.e, serviced used versus products sold, we were able to incorporate, in addition to the known AS-A-PRODUCT type of business models, two AS-A-SERVICE type of models into a two-by-two matrix.

Business Model Matrix™ provides a single framework of possible business models, ranging from Product Centricity to Network Centricity. Whether you want to leverage your ROI from a Share of Market or a Share of Transaction, or otherwise, is part of your strategic heading, while an additional choice of value discipline offers further means of differentiation.

Previously, a business was either focused on growing market share (product-centric) or gaining a larger share in the customer’s wallet (customer-centric). But these two models did not account for the rise of the platform economy, servitization or the sharing economy. The framework was incomplete.

After matching Marketing to Product Centricity and Sales to Customer Centricity, we were able to identify Delivery with what we call Resource Centricity and Success with what we refer to as Network Centricity. This then became the Business Model Matrix™.

Culture eats strategy for breakfast, execution for lunch, and performance for dinner.

Edwin Korver, author and management consultant

© 2014-2019 Edwin Korver, CEO Tenfore BV – all rights reserved – MOBILE +31-(0)6-52341111
Registered at BOIP.INT i-DEPOT 094029 (3.0), 095482 (3.1), 103610 (3.2), 105496 (3.3), 106619 (3.4), 110465 (3.5), 115384 (3.6)

ELEMENTAL BUSINESS MODELS

The Elemental Business Models™, identified by Edwin Korver, each have a distinct dynamic. Complementary to Don Peppers’ graphical representation of product and customer centricity (the AS-A-PRODUCT business models to the left), we added two new graphs to complete the series.

Leverage (return on investment) determines the business model. Prior to the Business Model Matrix™ business literature recognized two levers: Share of Market or Share of Wallet. We pride ourselves to have added two new ones.

LEVERAGING THE ELEMENTAL BUSINESS MODEL

The leverage of a resource-centric business model, Share of Utilization, comes from a ROI on deployable resources. For instance, if you deploy a car in a ride-sharing concept, the objective is to utilize the car to its maximum capacity.

On the other hand, if you offer a ride-hailing platform, in a network-centric business model, your objective isn’t to plan for capacity, but to get as much riders and ride-hailers together to facilitate rides, to obtain a Share of Transaction.

A product-centric business model focuses on gaining market share to profit from economies of scale, while a customer-centric business model focuses on a select group of customers that are likely to increase spending.

A resource-centric business model is all about planning for capacity by utilizing a syndicated resource, while a network-centric model aims to grow participation of an aggregated network to capture a share of transactions.

ROUNDMAP PLAYBOOK

To understand the level of sophistication of the ROUNDMAP™, we have created a strategic playbook, explaining some of the most noticeable traits of each of the four Elemental Business Models™.

Whether you aim to profit from economies of scale or from planning for capacity, or something else, is up to you. But each business model has concurring dynamics that are hard to ignore. F.i., a product-centric business model demands campaign-based marketing, while a network-centric business models benefits from word-of-mouth. A resource-centric business should emphasize on the service chain, while a product-centric one needs to address the supply chain. Et al.

There is so much more to this. If you want to learn more, subscribe to our newsletter or apply for a free Visitor Membership to be able to follow the free ROUNDMAP™ Introduction Course.

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PLANNING FOR SUCCESS

Choosing the right business model and value discipline is be vital to success. Airbnb’s market valuation ($38 billion in 2018) is higher than Hilton and Hyatt combined, yet it has no hotels. The new AS-A-SERVICE business models have proven to be alarmingly disruptive and there will be more to come.

“I know firsthand the complexities of leading an enterprise through business and technology transformation. It takes intense focus, a strong drive, and a clearly communicated to inspire and take an organization from where they are, to where they need to be - or where they want to go.”

Safra A. Catz, co-CEO, Oracle Corporation

TRANSFORMATION

We’ve discussed the Integrated Customer Lifecycle, Business Strategy and the Elemental Business Models. Now let’s have a look at how we can change our course to adapt to the world around us. We believe business models have evolved over time in two directions: either through Business Model Shifting or Business Model Regeneration.

Business Model Shifting is by far the most disruptive to the business enterprise: it is a revolvement to the next Elemental Business Model™, brought about by competition, market opportunities, regulation, consumer trends, or otherwise.

In 1974, IBM was known as Big Blue. As the company struggled to battle for market share in many areas, IBM soon realized that a select group of customers were likely to spend more than others. By focusing on this smaller group, IBM could maintain its high standards and price levels. However, in 1993 it found itself in dire straits, reporting a $5 billion loss, the highest in American corporate history. Desparate to turn the ship around, it could have lowered its prices or introduce a cheaper brand. Instead they acquired the consultancy branch of PwC and named it IBM Global Services. One decade later the company had trippled in size. IBM had shifted from a product-centric, to a customer-centric, and finally to a resource-centric business model – monetizing its highly skilled workforce of IT system integrators and businss consultants. However, in 2017 the company again reported a $2.6 billion loss. They will need to fill the capabilities gap to become a network-centric business, which is the next logical path of business development.

SHIFTING AND REGENERATION

Business Model Regeneration has been going on for ages and will continue to progress for ages to come: it is an evolution of an existing business model, driven by ever-advancing technology, new rules and regulation, etc.

One might think that the Sharing Economy is something completely new, but it isn’t. If you ever took a plane, train or taxi, you were essentially sharing a resource. And what about the Platform Economy? Nothing new either. Over two thousand years ago, traders and buyers met along the Silk Road, a series of trade routes between China and Europe. Facilitating a digital platform is similar to setting up a physical marketplace.

The evolution, clearly, has transformed the business model from a physical (marketplace) to a digital space (marketspace). In the same manner as digital is transforming industries into ecosystems, and (physical) workplaces into (digital) workspaces.

And I’m sure, in time, our digital self will have a birthspace too.

DESIGN FOR Experience

Depending on the Business Strategy, value (equity) is derived from a focus on one of four Elemental Business Models™. For instance, brand equity (storytelling) is vital for any product-centric business, while an excellent customer service experience will be more crucial for a resource-centric model.

Experience Design (ED) has been at the forefront for some years now. However, few realize ED has to be tailored to the business model. For instance, in case of a product-centric business model the focus should be on building brand experiences, while in case of a Resource Centricity it is mostly about the user experience.

ROUNDMAP_Experiences

Customer Experience, in our view, isn’t the all-encompassing ED. It is the main driver in case of a customer-centric business model, in which a group of comparable customers – for which the business can fulfill more of their needs – mean more to the business than others. They are their preferred customers and customers need to experience this.

DIGITAL TRANSFORMATION

Now you understand how a business strategy of ‘trying to be the best’ leads to machismo and tribalism, sabotaging cross-functional solutions and deminishing the chances of achieving any key objective.

Considering all this, what are the odds that digitalization by itself will transform a business?

70% of Digital Transformation (DT) initiatives fail, according to a recent McKinsey study. Indicating a humongous amount (900 billion out of 1.3 trillion USD over 2017) of money and time wasted, let alone the opportunity costs.

A business does not transform simply because it adopts fancy digital technology, like artificial intelligence, big data analytics, micro services or some other bag of tricks. Yes, the world is changing and business will need to adapt. But the biggest challenge is not to cope with customer expectations, or to try and outsmart competition (first-movers advantages are true some of the time), but to transform the mindset of the people inside the company.

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