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The Breakfast Club

November 1, 2009 Leave a comment

Most people have heard of the adage regarding the breakfast ingredients bacon and eggs, where “the chicken is involved; the pig is committed”. Fewer have perhaps considered its relevance to project service delivery.

A few months ago I had a very pleasant lunch with a representative from a local law firm who was trying to find new ways to attract business from small companies and entrepreneurs. It quickly became apparent that the major hurdle was how his firm – like most other law firms – insisted on charging only by billable hours x hourly rate. In this “cost plus” method, all the risk of overruns is bourn by the client. There is also little incentive – beyond the potential impact on repeat business – for the law firm to become more efficient in its work. It was clear that they supplied eggs.

A few weeks later I had another discussion with a local utility company. Their challenge was the opposite – in order to ensure predictability in costs, the utility required many of its suppliers to provide long-term, fixed price, contracts. Many of you are no doubt already ahead of me on this: They required total commitment; they required bacon.

Of course, just as bacon contains a lot of fat, so do these fixed price contracts: The suppliers have to allow for a lot of worst case scenarios in their pricing to make sure they don’t lose money during delivery. In some engagements these won’t happen. In some they will. On average both companies should make their target margins. Unlike the law firm there is a direct incentive for the supplier to become more efficient in its deliveries, but less incentive for the customer to do the same.

There is clearly a large middle ground between these extremes, where the customer and supplier come together to agree on an initial baseline or “fair sailing” estimate. When changes occur, Change Orders are created to cover any difference. Even in these cases, however, there is an incremental cost in time and money preparing and negotiating the Change Order itself. There is no free lunch (or breakfast!). The trick is to get the right balance between covering the costs of the project as it evolves, and generating the goodwill required to sustain a long-term mutually successful relationship beyond the immediate project.

A good project delivery environment will not only have a good knowledge base from which to create the initial plan to proactively anticipate & mitigate the risks that cause changes, but also the right cultural balance and value system to know how and when to apply changes.

Most nutritionists recognize breakfast as the most important meal of the day, providing the right foundation for having sustained energy. Project Service Delivery organizations would be well served to do the same.

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Being the Biggest Loser of Service Delivery

October 14, 2009 Leave a comment

As I sat and watched the Biggest Loser with my wife last night, it occurred to me that a lot of the lessons being taught on the show were also relevant to service delivery and ownership.

Contestants learn the importance of proper diet and exercise, and how just starving yourself and exercising 24×7 are not sufficient to lose weight in a healthy, sustainable, way. Instead, precise calorie counting and controlled exercise programs compatible with each contestant’s physical condition are the staples.

The same is true for service delivery where instead of calories, accurate and consistent performance data on the human, physical and financial resources consumed (ie the service inputs) are monitored. Matching that level of consumption with the expected activities is then required for optimum performance to occur without burnout.

Just as the contestants go from struggling to walk up a flight of stairs to running marathons, successful delivery of a service also increases its long-term potential. As customers make the service an indispensable part of their everyday needs they begin to look for more ways to use it, request more capabilities, or simply tell others about the benefits of the service. Each activity grows the service capacity.

The unexpected part for many competitors, however, comes in a third ingredient to the menu. That is, the trainers’ role in understanding the emotional reasons why the contestants became overweight in the first place. “How did you get to be over 400 pounds?” a contestant is asked. “One mouthful at a time” they seem to reply. So it is with service delivery, which often loses its performance one incident at a time until a culture exists that poor performance is the norm and that the service has such insurmountable obstacles that it is not worth improving.

Without addressing this underlying culture, any bloated, slow or unhealthy service is only going to achieve short-term improvements (think crash diets or New Year’s resolutions).

It is the job of the two trainers to guide the contestants to making the right choices in their diet, push them outside of their normal exercise comfort zones, change the value systems that lead them to becoming overweight in the first place, and take personal ownership and accountability for their recovery.

I wonder if Bob and Gillian would make good Service Owners?