To create a process of agile action to achieve strategic business goals.
To align the internal technical systems (work process), social systems, and economic system to achieve business strategy.
To achieve agile adaptation and alignment of the organization's systems, structure, skills, style and symbols.
To engage the maximum number of leaders and associates in the process of building the future culture and capabilities that will lead to sustainable performance.
I get friends during this lecture and the next few I want to begin to set targets for improvement. I want to assume that there's a corporate strategy and I want to assume that you're an operating manager of an operating unit or you are a member of a team that operates a property or a piece of the organization a business unit and I want to start to think about where we going. You know what's the what's the business strategy and what are the things that we have to change to execute that strategy to get to where we want to get to. So that's that's the purpose and we want to begin that with looking at the customer. You know we all work. Only one person. Ultimately no matter what our level or it is our function is we work for the customer or work for the person who writes check gives us their credit card number. You know that's that's the customer so we want to think about. To what degree and how are recurrently satisfying the customer. And what do we need to do to do a better job of satisfying the customer. Now I don't know your business obviously if I were working with you personally we could talk in real terms about your business but I want to take a case study business that you can understand. We can all understand and that isn't too complicated. This will be a simple case to illustrate the process and the principles involved. And then I'm going to ask you to take that and apply it you and your team preferably take it and apply it to your business unit. So we all know about hotels right now. What about restaurants and hotels. Because they're there easy for us all to understand. So let's assume that we are the management team of a hotel property or it could be you know three or four hotel properties. It doesn't matter. Let's assume that the corporation you know maybe the corporation is Hilton hotels or Mary Otter red roof. It doesn't matter. And let's assume that they have sent a top corporate target of revenue growth of 20 percent and increasing the return on operating assets. We're going to talk about revenue growth and operating assets in more detail later. But let's just assume there's a goal for that goal for return on our assets. Most corporations would have both a revenue goal and then a return on asset goal which is a way of computing profitability of our assets property profitability the properties. And also let's assume that the corporation in thinking about how we're going to get there what they have said and you can do this. They said a productivity number. And in almost every business there is a yield number and then there's a utilization number for example in Airlines I've worked with several airlines. The yield number is dollars per seat because it's possible if you have 200 seats on an airplane you could have all 200 seats filled but you could still be losing money if what it costs us to operate was $100 a seat for a given flight and our average revenue was $90. See. You know it doesn't matter that they're all filled up you're going to lose money. So the yield has to be higher than the cost. So let us assume and you can imagine that applying to almost any business took to hotels. You know what do we get per room and what does it cost us to operate per room. And if we can increase what we get which might mean fewer discounts are raising the price there are lots of ways to get there that would improve the economic performance over business. So there is yield dollars per seat if you will. And then there is utilization per cent of seats filled in and a hotel. It would be the percent of rooms filled each night. Or you could do it by week or month or year. But but the percent of rooms filled for any given time period and you can see you know those two numbers sort of the yield and the utilization rate you know they pretty well define economic performance in most organizations in a plant. You know it's operating efficiency. There's some theoretical limit that the machinery in the plant can spit out of you know whatever the product is. And that percent is the the utilization and then the dollars per unit. Right. Relative to our cost that's the same as yield on an airplane or in a hotel room. So let's assume that we have those goals from the corporation we are if we don't we set them ourselves. We decide you know what we want to do and improving dollars per room and percent utilization. And I would assume this is not true then you should work on this. I would assume that if you're a hotel manager you know the percent of rooms that are utilized each night and over the week or over the month you probably also know that there are seasonal variations in that. There are certain weeks or months where that utilization rate tends to go up I will assume also that you know what that number is in terms of the yield terms of the dollars per room. If not get it you need to you need to know those numbers. So let's let's assume that's a framework for a business strategy. Now the question is how are we going to get there. You can't just yell at people to do more. You get more money or get more customers here. You know that's not that's not that's not that's strategic yelling it's not strategic planning and it's not strategy execution. We have to think now about the nature of our system. And you remember our three circles practical social and economic systems we have to think about those. And we have to think about what is it we need to change what is we need to redesign in each of those. And we're going to do this as we go through the rest of the course till we're actually doing the design and creating that that future state. So here is a chart that I suggest you use now in in the hotel that we have. There are different aspects of the hotel. Me for example there is the room itself the quality of the rooms the size of the room etc. there are communication patterns and communication devices that go on in the hotel very very important how people feel about their stay is at least in part conditioned by how you answer the phone when they call down for room service or when they call down for something else. And there is a restaurant let us assume in the hotel and then there is staff behavior right. And in the restaurant of course you have the menu and you have the quality of service and so forth. And this chart is simplified. If you go into much more detail if you want it if I were sitting down with you and we were doing this for real we were probably flesh this out more and have more more detail to it. But just trying to give you an example and make make the point so under-staffed behavior you know there's there's courtesy of staffer's responsiveness of staff how knowledgeable they are. So. So those are features of the products and features or characteristics of the product or service that we offer through the hotel. Now we want to know what our customers think. You know do they think they're all great. Do they think they're all terrible. Do we know. Now I'm telling you this is just a must. You must know the answer to this question and you're going to survey your customers. You can call them you know follow up calls and and interview them. You can give them you know cards to fill out as they leave the hotel. Lots of ways to do it. You get their e-mail you send them the survey monkey you know online survey lots of things that you can do to get their feedback. But you must have it you must get their feedback and let us assume that there are really two dimensions of this. You know one is how they rate the restaurant the menu in the restaurant for example or how they rate the internet availability in the room. For example those are both characteristics that may or may not be important to them but we want them to rate them on a one to five scale. You know one being I think it's terrible five being it's terrific and you know very simple scale it's not make it complicated for our customers. So let's use a one to five scale and then we also want to ask them how important it is. So for each feature like the cleanliness of the room for example or the availability of Internet service or the television cable service. How do you rate that you think it was terrific or do you think was terrible. And how important in your in your making a decision to choose a hotel. How important is that feature. Now you see what we're getting to here what we're getting to is we want to work on the things that are most important to our customers. Right. We're more likely to increase customers coming back. We're more likely to increase the overall rating of our hotel on Expedia or whatever web sites that they're traveling or use for travel. And we want to increase our brand perception. We want to increase the degree to which out in the marketplace people think we're a great place to stay. So what's important is improving in the customer's perception of those things that are most important. So we're going to do that rating we're going to ask them to rate. And here is a result. This is just you know hyper hypothetical Riso. And what do you see here. The things that I've indicated in in red are the things that they felt were most important but they raided low right. So you want to work on those things. If I tell you you know the most important thing to me. You know I give it a 5 when I visit a hotel and I this is pretty much a true example. Internet wireless availability. You want to be able to go down to the restaurant use my laptop or on the room use my laptop and I want it at high speed and I want it all the time. I want absolute high quality Internet access app. That's one of the most important things to me when I visit a hotel. So I give it a 5 in terms of its importance now than when you ask me to rate your service. And you know my little meter to the left or right on my laptop. It was always low and I had trouble logging on and the log on was confusing and whatever else was wrong with it. I rate it poorly. I give you a poor rating. So the fact that I've said it's very important and I've also said I don't think you're very good at that. That should tell you that's a high priority for improvement. Does that make sense. If I say something I think something is terrific. I think the rooms are very clean or I think the the the the quality of the food was terrific but actually I don't care because I'm going out to eat anyway and there are a lot of restaurants around the hotel so that's not important. You're not going to worry about the things that are not important. But I rate high. So we can put this on a matrix and the Matrix is going to look something like this. Right. And this is called the Kaino analysis. But don't worry about that. Does it matter what's cool. It's simply you know an evaluation of customer satisfaction to importance or value that makes sense. So you see in this analysis based on that previous chart something that I said are the customers playing customer I said was very important was the workspace. Now maybe when I go look at your hotel rooms there is no desk. I want a desk at the desk I want a place to plug my laptop in and actually plug in several devices. I want to be able to plug in my iPhone to charge and so forth. And there's been a lot of innovation in the last five or 10 years in the quality of workspaces in hotel and that's because if you're appealing to business travelers really really important for business. And you can sort of see by what's all the way on the right hand side that thought was rated near 5 you know 4.9 or so. The things that were rated high pretty well indicates your business travelers here. Right. I mean workspace was rated high and Internet access was rated high. And I think you know for most business travelers today those are both really important factors. So those are our Northeast. Those are in the upper upper right hand side or to the right. Right for importance up for how unsatisfied you notice the scale is your first one meaning you're lousy is at the top you're doing great is at the bottom. So we want to go to Northeast. We want to we want to move up there. So that's that's that's an analysis of things you need to work on now. Think technical system and social system again. And I want you to do this analysis and I want you to make note that when we get to design this is what we're going to work on in designing the new system and executing our strategy. The strategy of increasing utilization rate is not going to come by saying increase utilization rate it's going to come by having better internet access. It's going to come by having a more comfortable worksite workspace for the business traveler. So that's what you have to do to execute strategy. You've got to work on these things that satisfy customers that are important to customers that add value for the customer. That makes sense that's what that's what this is. Let's now go from the next question. Look at what's going on and.