Process innovation will create a strong barrier to entry for businesses in the 21st Century

Recently, I start pondering the chasm that exists between what the sales team promises the clients and what is technically feasible by the operations teams given the resource constrains. This is not a new question, but one that surfaces from time to time during my discussions with countless people working within IT companies.

The first time this question surfaced was more than 8 years ago when I was just in the midst of stepping into the IT service provider arena. The name is Patrick. He was then studying in NUS in the school of computing and had teamed up with a few of his ex-classmates from his polytechnic to start an IT company. One of his two chief sources of headaches then was the problem of the sales man over promising the client in order to clinch the deal and thereby leaving the technical team to deal with the issue of implementation. This issue coupled with the second of headache of excessive scope creeping by the client often lead to projects handled by his company falling from the profitable regions to the regions that are down right unprofitable. He soon closed down his IT Company. The last time I met him, he was working as an employee in one of the government run business entities. Whilst it may not be what he had intended prior to his graduation from NUS, he no longer had to deal with the problems he faced when he was venturing in a start up.

A few months back I managed to sit down with Mathew Noble who is currently working in SQL Star. SQL star is an IT company that specializes in Microsoft Sharepoint projects that are mid ranged in size, with projects normally ranging from $50,000 to $80,000. Interestingly what I managed to glean from Noble during our coffee session together was the fact that SQL Star has a very strict and well defined standard operating procedure set in place for its entire staff to adhere to. This has enabled SQL Star to maintain a project success rate of 95%, impressively higher than the market average success rate of 50% for projects this size.

He did share some of the procedures that his company’s sales staff and technical staff engage in prior to the pre-sales phase of and IT project. There are high levels of interaction between the sales staff and the technical staff during this phase of the project. The sales staff does commit huge amounts of effort in the pre-sales phase to work on potential clients to bring them from the phase of being potential prospects to the phase of closing. Often towards the latter phase of this process conflict occurs between the sales team and the technical staff team. It mainly occurs when the technical team does a feasibility check after having acquired feedback from the sales team the client expectations of the potential project. The sales staff having spent lots of effort to work on this prospect is eager to close the deal, whilst the technical team states clearly what is about to be promised by the sales staff to the potential client is not feasible. Often in this scenario, the sales team differs to the technical team, and the sales staff is thereafter delegated to work on another potential lead. SQL star thus manages to ensure quality and fast turn around time for their projects thereby profitability.

Once during a drinking session with a close friend of mine, he brought up the subject of dropping the use of the off shore development center he has been working closely with for close to the the past 10 years. The main reason was because he finally lost his patience with them. His complaints were mainly the fact that sales staff from this off-shore company attempts to promise everything within the job scope all the time and more often than not above and beyond what was asked for. Had this off-shore company delivered what was promised, this friend of mine would have been an extremely happy man. However such is usually not the case. What often happens thereafter is pro-longed delay to the delivery of the required scope and at times only 20% delivery of what was promised. My friend remains a very unsatisfied person thus.

My brother on occasions when we have the chance to hold discussions does reveal some of the knowledge he acquired while being in the same trade as I did. The main difference between him and me is the fact that he has always been working within a corporate environment where the technical team and the sales team are two different groups of people. One of the main things he sometimes mentioned during our discussions is the need to keep the sales team in check so as to avoid unnecessary and sometimes damaging over promises by the sales team to the clients. Such scenarios often lead to contingencies in the midst of the operating process.

Such a thought was also expressed by the current Chief Marketing Officer of Huelabs, an IT company that specializes in education software. The last time we met, this company was rapidly expanding overseas to Dubai, Australia and parts of Europe under the guidance of this CMO. He always states “a company will not die from starvation, but will definitely die from indigestion.”

This dichotomy in philosophy could not have shown itself better than these two recent projects I had the chance to come into contact with. The first project is one that is worth a few hundred times the salary of an average working adult in Singapore. The essence of what happened in this project could be surmised in this statement by the project manager from the client’s side “just between you and me and off the records, the sales team has been lying to me since day one. What was built does not even conform to what we wanted.”

While it is too harsh to call what the sales man did as lying, I would rather express it as failure by the sales man in the management of client expectations, thus leading to unrealistic expectations by the client.

The status of this project has since fell from the profitable range into the reds for the vendor IT Company.

The second project was a pretty challenging one as the client company had more financial muscles than the vendor IT Company. The truly fortunate situation that occurred is the fact the project manager had the strong support of the company director and that the both of them stepped in prior to the sales closing of the project. Attempts had been made by these two individuals to ensure expectations of both parties were realistic prior to project commencement. The project manager was deeply involved with communications with the end users of the client company. In the process, he managed to identify potential pitfalls and steered the project clear of them, thus far keeping the project within the profitable region.

Based on so many examples I have had the chance to come across it seems that while the end products remain almost similar in nature what truly ensures the successful completion of a project has really a lot to do with the process that runs within the existing company.

Thinking back now to the statement made by one of the consultants who conducted one of the courses I took back in NUS, it is very true indeed. Product innovations and process innovations both take place within an organization. Knowledge about a product can be easily diffused out of a company and quickly copied by a rival company who there after produces a rival product. Knowledge about a process remains large tacit and has difficulty in terms of adoption by rival companies. In that sense, in the 21st century arena where information flow is so rapid, the true edge that a business can create over its competitors is not in terms of product innovation but in terms of process innovation. This is in line with the factors that result in the dominance of UPS and Wal-mart in their own markets.

Turning sand to stone

Recently I started to realize the nature of the path I have been threading upon has shifted. More and more am I faced with tasks that require through put of more than 24 hours effort within a span of 24 hours. I started to feel strongly the limitations to being just one man.Strangely too, I started unknowingly to gather around myself a band of comrades in my conquest.

This gradual shift in the path I am threading on has slowly but surely forced me into another paradigm. No longer can I consider solving a problem when I encounter it as an acceptable method to resolve issues. Half the time, I might not even be the person handling the issue and facing the problem when it happens. This really brought the need for me to really sit and consider things thoroughly before attempting to deploy any human resources available at hand to the fields. In a sense it is a tougher job and more draining for the mind than simple physical labour. It felt almost like mentally reaching out to the psychic universe and attempting to knead the ebbs and flows to your wishes before sending your forces out for exploration.

There are a few things that I have been pondering of late. How was it that conquerors could build armies from scratch and grow them into massive forces capable of overrunning entire continents? What was it that inspired the members of these armies to such heights that they were willing to forsake their lives in battle to win a war? What was it that kept the members of these armies together despite proofs written in countless research articles stating that high level of social loafing are bound to exist in places where population density is extremely high?

While these are not important questions that I need answers to at the moment, due to the fact I am still in direct communication with each member of my band of comrades, it will so start becoming a pressing situation when I start to form a heirarchy of more than two tiers for my operational needs.

I guess it is time once again to turn to history, philosophy and religion to search for the answers I am looking for. Many before me had faced themselves with this question, and many of them had came up with their own version of what the answer should be.  To save time, I guess I should not reinvent the wheel.

However one very challenging task faced is the idea of bringing these methods to life. A simple analogy to describe this task is the phrase “when does the extent of technique ends and the realm of art really starts”?

The importance of process innovation within a company

In June 2009, whilst sitting in the park enjoying the afternoon breeze under the clear blue skies, I was  pondering deeply the directions Gary Web Consulting Group was headed.

I came to a conclusion thereafter that it was necessary to increase sales volume for Gary Web Consulting Group. One of the methods I identified after having an evening discussion with my brother Cliff Teh, was to establish more industrial partnership mainly with IT companies and IT brokerage houses. This was basically to leverage on their expertises and existing networks to achieve what I envisioned.

10 months later in April 2010, Gary Web Consulting Group has managed to established quite a few partnerships with firms within Singapore, US and the UK. Sales leads volume has visibily increased over the span of these months,  leading to subsequent increase in sales turnover volume.

Whilst currently Gary Web Consulting Group is still working within its maximum operating capacity of 160 hours per month, in anticipation of the possible need to constantly operate above and beyond its monthly maximum capacity in the near future, I have recently started to shift my attention inwards. One of the chief areas of focus is the further streamlining of the various existing business processes within Gary Web Consulting Group. The objective was to attempt at reducing unnecessary steps via its re-configuration or through leveraging newly available technology. Such a process will make possible a higher rate of throughput with the available 160 hours per month. This whole exercise can be classified as concious pursuit of process innovation. Whilst the eventual product created remains the same, the methodology applied during the process of creating the product differs.

Process innovation aims not at increasing the overall yield via increasing the aptitude levels of individuals involved, but attempts to increase the overall yield inspite of aptitude levels of individuals involved.

A simple example would be the adoption of digital camera use by a industrial photographer. The feedback cycle is immensly shortening as compared to the traditional camera where feedback was only available when the photos were developed.

Business process that have experienced process innovations within Gary Web Consulting Group are as listed below:

  • Off site communications
    • Asynchronous communications is made possible and more coherent with the use of voice and videos
  • User Training and knowledge transfer (through the use of videos)
    • Essential knowledge that customers will need in the management of their site is made possible via the use of videos. Also a knowledge repository has been created online for 24 hours access
  • Website Implementation creation
    • Knowledge in expertise in the customization of existing open source content management system now allows faster time to market in the creation of a web portal

Business Processes that has been identified for process innovation

  • Pre-Sales
    • A systematic approach is to be develope to further improve sales success rate
  • Interface Design and Mock Creation Process
    • More research is required to acquire tools that will aid in further reducing this particular process. Currently per design and mock  up requires up to 2 man days for creation via the use of Photoshop and thereafter skin it via CSS and html. It is most ineffective.
  • Human resourcing
    • Attention is required in developing a system to more systematically acquire and retain capable human resource in the near future
  • Project Management
    • Whilst the current project management methodology works superbly in a small team of up to 4 people. This method has not been trialed on a team of a larger size
    • Tools are to be acquired and methodologies created to further aid collaboration and communications within a team

An evening when all things come in threes. Work productivity and the two matrix

Since two months ago, I started putting into practise the maintenance of a time sheet. This is thanks to the need that arose due to my participation in one particular project. However not just limited to maintaining a time sheet for that particular project, I extended the use of this practise to maintain a comprehensive record of all my daily activites.

Each day of my time is divided into 30 minutes slots. Each hour will contain two time slots one ending at the 30minute mark and the other ending at the 60 minute mark. Each slot is dedicated specifically to just one activity and one activity alone. In the event whereby contingencies arise, that contingency is assigned to the next available time slot which is in best case scenario 1 minute away, in worst case scenario 30 minutes away. Such a practise while inflexible at first helped me in maintaining continuity in work hence ensured an acceptable level of productivity. I effectivly avoided the situation of having to tackle all matters while getting none done at the same time.

This evening after clocking a 9 hours working day, I sat down infront of my computer and started examining my time sheet. More specifically I matched the profit (in terms of cash in my bank account) I made over the past two months to specific time slots of specific days.

That which arose clearly before my very eyes was very interesting indeed. I observed a very clear pattern. Two patterns in fact. Profitability in terms of products sold as well as quality of customers.

The 3 businesses below are still by far the more lucrative products of my operations

  • Internet market campaigning for SMEs
  • Building DIY sites based on wordpress for SMEs
  • Building non-DIY sites based on Joomla for SMEs

Lucrativity is measured in terms of the 3 factors below

  • length of project turn around time.
  • Promptness in terms of client payment.
  • Cost in terms of time and effort spent on after sales support.

Having summarized my operations with the use of both matrixs. The images of three men suddenly popped into my head.

  • My Dad, veteren hawker who has been in business for years.
  • Master Gwee, an aged Feng Shui Master who is one of my existing clients that constantly provides me with clear insight to things in the environment as well as human physcology
  • An old Chief Marketing Officer of an IT company, which I once went for interview at, whom along with the CTO was very interested in getting me as an Executive Committee member for their company. (I finally backed out from their offer because I came to realized I wanted more from myself and that giving up the chance to bring forth my fullest potential just so as to provide security for a woman would cause be deep bitterness and hatred in me towards the latter part of my life.)

From my dad, this statement “son do not ever enter into ventures that don’t bring in money but just empty promises. Always ask your customers to show you they have money to spend and are willing to spend it.”

From Master Gwee, “always focus on where your finishing line is and do what you should do to get pass the finishing line. Avoid other side adventures that will only delay your crossing of the finishing line.”

From the CMO “you might die from prolonged starvation but you will definitely die immediately from indigestion. Despite the fact customers always attempt to beckon us to venture in a certain direction, we always politely reject them when that venture will not bring us strategic advantage but only cause the thinning of our valuable resources.”

To make a long story short, I only have a maximum of 14 possible working hours per day hence I should be spending a higher percentage of these hours milking my existing cash cows by concentrating on the sales of my most lucrative products as  well as looking for related markets to push these lucrative products to, instead of spending half of them for the creation of new products.

Creating of new products can come when I have automated the delivery process of my lucrative products through a process called leverage and have more funds and capital for RnD.