A Single Version of the Truth


Commit the company to achieving a unified understanding of the business, a single version of the truth. This needs to be the foundation of leadership vision. Only then can an organization foster the collaboration and empowerment necessary to be truly global. How?

The old business solution would have been to centralize power and decision-making. That model doesn t work anymore. Old-fashioned top-down management created an environment of fear, distrust , internal dissension and grudging compliance ”all enemies of corporate success. From headquarters to the front lines of customer service and the point of sale, employees make decisions that can create or destroy value. Yet this top-down style of management failed to recognize that the decisions and actions of people regardless of their position have an enormous impact on the entire organization. Corporate structure and resource allocation magnified management s tunnel vision.

Today s most successful leaders spread the power throughout the company. Success in the cutthroat global economy requires collaboration, cooperation and commitment. The pace of change in the market and the speed at which decisions must be made to maintain a competitive advantage demand a brand new decision-making model. Decision-making authority must be distributed among a diverse universe of individuals. Responsibility and accountability need to be shared more widely. Transparency and simplicity are essential.

In the airline industry, British Airways is simplifying and it s paying off.

start sidebar
British Airways

British Airways positions itself as one of the most stylish, full-service airlines with a global network. Therefore the company is constantly dealing with the arcane issues associated with an airline that serves customers around the world across a variety of cabin classes. Complex as the business is, CEO Rod Eddington s core principles are simplify, centralize and standardize. Determine what is useful and eliminate wasteful complexity. Having a single authoritative source for information around the company is imperative to implementing this vision.

Every division in the company is now asking itself, can this be done more effectively and efficiently ? Do the different cabin classes we offer add value? What is the optimal catering mix? What aircraft mix is best for our fleet ?

One example of such complexity is British Airways fleet of aircraft. The airline used to have multiple layers of fleets and sub-fleets and sub-sub-fleets of aircraft. The airline recognized the need for fleet simplification and the engineering division asked itself, is this complexity necessary? The answer ”no. Fleet complexity was wasteful. It ran up costs and unnecessarily complicated the maintenance of aircraft types and the scheduling of engineers . British Airways has standardized its aircraft fleet, thereby reducing costs and complexity. This is just one example of Eddington s vision of simplification in action.

end sidebar
 

The leadership role is even more crucial as companies simplify, centralize and standardize, dispersing decision-making. Decentralized organizations demand clear, consistent vision disseminated by leadership s action and example. To avoid fragmentation we must strike a careful balance between encouraging and enabling decision-making by others and achieving a unified corporate vision, seamless communication, transparent operations and a universal core understanding of what differentiates the business from its competitors in the marketplace .

To manage effectively in today s information-driven market environment, executives must create a corporate culture in which creativity and the ability to manage change are fostered without losing control over core operations. Embrace productive change and demand the same of the rest of the company. Everyone in a company follows our lead. Corporate leadership is not a democracy. The core vision of a company comes from the top. The rest of the company can then be empowered to realize that vision.

Centralize goals. Democratize decisions.

A unified enterprise prevents the counter-productive fragmentation of siloed divisions and promotes stability and control in concert with the flexibility necessary to compete and seize opportunities as they arise.

It seems like a paradox, but understanding the single truth of an enterprise, rather than locking leadership and the company into a status quo of behavior, enables more creative responses to business problems. Harrah s Entertainment proved this.

start sidebar
Harrah s Entertainment

Harrah s Entertainment leads the gaming industry in profitability. It achieved its leadership position because, from CEO Phil Satre down to the front lines of the company, Harrah s committed itself to creating a corporate culture that embraced a single integrated view of the enterprise. In order to do that effectively Harrah s had to overcome the classic gaming industry dogma that each property is a separate operation unto itself and therefore each property s business information is an asset owned by that single property rather than the entire corporation. Each of Harrah s casinos kept its own records. Getting a clear understanding of all the points of contact with a single customer across Harrah s many casino properties took too long to yield any business opportunity.

Harrah s suspected that customers who gambled at their Atlantic City casino probably also gambled in other cities, maybe even at a Harrah s-owned casino. But the company wasn t tapping that opportunity, because putting the information together from across the properties was too time consuming. Harrah s performance in the industry lagged .

In 1997, Harrah s initiated the first ever cross-casino recognition and rewards program and broke down the gaming paradigm. Today, its robust rewards program, Total Rewards, allows Harrah s to see its customers behaviors, preferences and needs no matter which property they are staying at. So the company can target incentives strategically and deliver what customers want, when they want it.

The tiered loyalty card program drives a host of service and marketing initiatives. At every point of contact, the slot machine, hotel check-in, restaurants , call centers, the Web site and everywhere else the company touches its customers, Harrah s can customize the interaction, make tailored offers and personalize service. Harrah s can now accurately predict customer response to each of its various initiatives. That means higher response rates and a more profitable relationship with the customer.

From 1997 “2000, Harrah s conservative measurements show an after-tax 60 percent internal rate of return on the Total Rewards program. Taking timely advantage of opportunities has fueled enormous growth and made Harrah s an industry leader, market leadership that s only possible because Harrah s has a single version of the truth, enterprise-wide.

As Senior Vice President John Boushy says, the Holy Grail at Harrah s is to manage information once .

end sidebar
 

Managing from a single, complete view of the company means no surprises. Everyone hates surprises ”the market most of all. It is a balancing act. The stronger the core, the more the margins can sustain, even encourage , up-to-the-minute responses to changes in the fast-paced business environment.

In the telecom industry, the speed of technological change and fickle customers mean that agility and responsiveness are prerequisites for success. To compete in the market, telecom companies must be structured to capitalize on their information.

start sidebar
Belgacom

Telephone companies traditionally organized their billing systems by telephone number. In the mid-90s Belgacom, a Belgian telecom owned 50 percent plus a share by the government and the balance by a consortium between SBC, TeleDanmark and SingTel, realized that this telephone number “based system was confusing to the customer, open to fraud and unnecessarily fragmented . The CEO called for a new customer focus and charged the company with achieving a single view of its customers. He spearheaded a corporate reorganization around customer-focused divisions ” corporate, individual, small business and residential.

Now Belgacom sees all the business of each of its customers and is able to quickly analyze customer satisfaction, customer performance and the profitability of products. And the ability to better analyze brings with it more satisfied customers, higher performance and increased profitability.

end sidebar
 

A single view of the enterprise supports the CEO s strategic vision. Top managers and frontline employees alike must be empowered to see the global business in the same way ”one set of numbers, the right numbers ; one version of the truth. Strategic, tactical and event-driven decisionmaking requires that detail level data from across the enterprise be put in the hands of those on the front line, such things as details of customer relationships, the demand chain, the supply chain, financial operations, business process management, e-commerce and industry-specific operations are just a few examples. Speed and quality, once an either/or proposition in business decisions, are both equally critical now and only a company with a single view of its business can achieve both.

Managing relationships is an integrated and critical part of core business operations. Organizations previously managed by product or service, but now they manage by relationships ”with customers, with partners and suppliers and with employees. Managing customers, finance, logistics, marketing and every other business function is about fostering valuable relationships. Open communication and the flow of information are the basis of good relationship management. The front office and back office become one open office. Better and faster operational decisions go hand in hand with better and faster customer communications. Companies that achieve this level of business intelligence cut costs and achieve significant improvements in their return on investment.

A successfully implemented vision requires a single version of the truth, disseminated to the company and acted on by everyone. The idea is great in theory. How is decision-making effectively dispersed in reality? The first step is to empower employees with current, comprehensive and integrated information.




The Value Factor[c] How Global Leaders Use Information for Growth and Competitive Advantage
The Value Factor[c] How Global Leaders Use Information for Growth and Competitive Advantage
ISBN: B005S10A3S
EAN: N/A
Year: 2006
Pages: 61

flylib.com © 2008-2017.
If you may any questions please contact us: flylib@qtcs.net