In Operational Excellence, whether you’re using Lean or Lean Six Sigma, our goal is always to improve products, services, and processes. I often think of it as striving to be better all the time, but Operational Excellence can holistically encompass effectiveness and efficiency across an organization from business strategy to customer relationships.
However, even if you do not use Lean or Lean Six Sigma, effectiveness and efficiency are two key metrics that every business should track.
How Does Operational Excellence Define Effectiveness and Efficiency?
Effectiveness is an external measure. It means how successful your organization is at meeting your customer’s expectations.
Efficiency is an internal metric. You know what your customers want, we’re measuring that with effectiveness. Efficiency is how productive we are at meeting those customer’s expectations.
When Efficiency Becomes a Problem
We find that many of the organizations that we work with that one of the challenges they face when applying Lean or Lean Six Sigma is that they want to be really efficient. We respect that. We think that’s a good thing.
They’ve got clean processes. They’ve got employees that know what to do and when to do it. They’re striving to be an efficient organization, but this can backfire when it goes too far.
The Efficiently Inefficient Insurance Company
Let me give you an example.
I was referred to a new insurance company because we were looking for a different type of insurance that we didn’t have. We reached out to them and I talked to someone on the phone. They let me know what information they would need to move forward.
It was an extensive list, but we compiled all of the documentation and sent it over to a generic email address.
Then I didn’t hear anything for two weeks. I called into the toll-free number and I had to ask if they had received our information. The representative on the other end said, “Yes, we did. We’re still processing it.”
I said, “Okay. In my original email I requested confirmation that you got our information because this is really important. This is time sensitive for us.”
The rep said, “Okay, we’re working on it. I’ll get back to you in the next day or so with a status update.”
Ten days go by. Nothing.
I have two options. I can send a follow-up email to the same email address or call the same toll-free number. I do both. I don’t get a response via the email, but I’m able to reach another representative.
The rep said, “Yes, the information is being processed. We’ll get back to you.”
I said, “Is there somebody specifically assigned to my account?”
The rep said, “Oh, no. This is how you work with us. This is the one number you can call. Any of us can handle your business.”
I said, “Well, this is time sensitive. It’s been over a month now and I don’t know where I stand. You haven’t asked me a single question. You haven’t confirmed anything.”
The rep said, “We’ll get back to you”.
It’s the same song and dance.
Organizations Should Have Customer Touch Points
This insurance company was trying to be so efficient that they do not offer up direct contact for a sales process. They’re trying to be so efficient by having one phone number and one email address that the result is the customer is excluded. There are no real connection points.
I spoke about this more in my Beware of Over-The-Shoulder Customer Service blog, but effectively, the representatives I spoke to continued to pass me over their shoulders. If you try to be too efficient, sometimes you exclude some of the most important connection points with your customers. This can make customers feel like maybe you’re not accepting new customers or not interested in working with them.
That’s how I feel with this insurance company and I made the decision to discontinue trying to be their customer.
My challenge to all organizations I work with is to first understand effectiveness. What do your customers want? Then you can build efficient processes around your customer’s wants to make sure you’re profitable using Lean Six Sigma. Focus on Operational Excellence.
Learning to balance effectiveness with efficiency will help you maintain a consistent relationship with your customers – and a meaningful one too.