Tuesday, October 18, 2011

Creating value for customers with a systemic view

No lack of convincing

Many are convinced that the current complexity of our socio-economic society, the complexity in the management of enterprises, and the rapid changes in technology create a need for another way of thinking in order to provide sustainable solutions to customer needs.
Many are convinced that it is important to have customer focus and to consider him as a partner of the organization.
Strategies has to be developed by looking from the outside and not from the inside out.
Many are convinced that cooperation is necessary in order to create customer value through innovation. So we are seeing alliance programs, and other cooperative ventures .
Many also believe that decisions must be supported by objective data and facts from as many sources possible
But what tells us the reality in connection with our customer relationship and the creation of value?
  • Most organizations are still structured in departments, with hierarchical structures and little connectivity with the customer.
  • Lots of information about customer requirements, satisfaction ... are still found in silo’s . Decisions are therefore made in isolation without considering their the impact on the entire organization.
  • Customized action are not centrally coordinated.
  • Customer satisfaction surveys are usually only made annually.
  • Sometimes it is not clear who the customer is: internal client? Distributor? End -user?
Our linear thinking, the search for faults in a cause-effect relationship, and the hierarchical structures of companies are still deeply established.
Yet this has been changed by the insertion of the supply chain principle, the lean philosophy, balanced scorecard and value stream mapping, to name a few.
Business Models as the Baldrige Award and EFQM are putting emphasis throughout the organization. to see and connect to the whole through feedback loops.
But in practice, the complete interrelation between the elements are not addressed.
Sustainable value for customers is not the sum of all values in isolation from each other, but the continued value creation through the dynamic interaction of all elements of the organization.

How can we achieve this?

Organizations have to be seen as open systems!

An organization (company) is a group of elements (or subsystems, as single parts: people, processes, machines, ...) which are interacting with each other so that they are a dynamic and connected whole, whose action is influenced by elements outside the organization: the environment,the competition , legal laws, etc.
The property of the system 'customer value' stems from the relationship between the components ,having always a purpose for something or someone .
The environment consists of suppliers,customers, competition, market, social and political laws, environmental laws, etc.. All these external factors have interaction with the organization and should also be considered in the valuecreation for the customer .

The behavior of the whole complex system can not be detected by seeing each element in isolation!



A new thought pattern has to be used : systems thinking.

Systems thinking is a way to look at the reality, as a series of elements dynamically related to each other, and not just to look at the elements themselves.
Contrary to conventional thinking (linear thinking) systems thinking is focusing on:
  • The interaction's
  • Identifying positive and negative feedback
  • Being Open-minded
  • Accepting different opinions and viewpoints
Similarly, the value for the customer has to be viewed from all perspectives: what impact does marketing, research, finance, production quality, etc. has on customervalue.
With systems thinking, we have to look how the different customer requirements are connected with each other.

Being aware of the characteristics of systems

- Each system has a purpose in a larger systemEach system has a goal in a larger system

The organization, is part of a market. Customers are in that market. The market is influenced by socio-economic laws in a particular country. This country belongs to a particular continent, etc.
The customer has its specific purpose in the market.The customer service ensures that orders are carried out smoothly, the production ensures that the products are made on time, quality control department ensures that the products of your organization arev delivered seamlessly to the customer.

All system components must be present to achieve the optimal goal

A company consists of several departments: customer service, engineering, production, quality,Finance, sales, etc.. The communication of customer requirements is fed by information from all functions. A information, eg quality, not provided to production (can come from engineering, customer service), can jeopardize the quality of the product or service.

There is a hierarchy between the elements and form such a structure

Communication of information, such as engineering data ,quality, customer demands, production data... are proceed according to some systematic processes in a specific order: production can only begin when all details of engineering are delivered. Engineering will receive the qualityrequirements from the qualitydepartment.

Systems can change by getting feedback

For example: Through customer satisfaction surveys, it is determined that too much customer information is spread across departments. The system is adjusted by centralizing everything to the customerdepartment, which is then responsible for dissemination.

Systems remain stable in getting feedback

When getting a dissatisfactionreport, the system is adjusted to reach the goal anyway. Eg throughout the entire supply process ,regularly deliveryprogress and quality are measured and discussed, so the customer requirements (goal) can be fulfilled.


A sustainable value for the customer can be obtained by linking to our current thinkmodel another thinkmodel:systemic thinking! Systems thinking is important because it gives you a more precise picture of reality. It helps you to find sustainable solutions to complex problems and this with a long-term vision Systems Thinking teach you also that there is not one solution, and that certain actions can have unforeseen consequences: positive or negative

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