Operation Improvement Inc.

Software as a service is frequently offered with a “free tier” or “freemium” option for testers to evaluate the suitability for use. After that, typical billing is either per seat licensing or “pay per use”. While per-seat agreements are attractive for a fixed and predictable periodic expense, there are a few things to watch for.

1. Seat bundles. Licenses may be offered in bundles of 10, 25 or more.

2. Vendors that don’t publish hard price commitments often want to negotiate a contract commitment or upsell.

3. License renewals may not have a cap on price increases.

4. License management, making sure that every seat is filled, requires oversight.

5. Per seat licensing agreements may not easily scale up or down when demand for the service changes over time.

“Pay for use” services easily scale up or down. This reduces costs when need for the service declines, but the total cost over time may be harder to predict, harder to budget, and may wind up costing more than per seat licenses.

Run the numbers and model scenarios when comparing vendors with different payment models.

Final thought, always identify a primary vendor and a backup plan for cloud-based services. Know how you will route phones, emails, web traffic and where you will host servers just in case.

The largest vendors in the business will obsolete a service when it is no longer a part of their tech road map. (Microsoft SKYPE, Amazon Chime Business Calling, etc.)

The “Elon Musk” DOGE approach is relying on a couple of rapid improvement secrets that we have used for years.

Here’s a big one: Don’t trust the existing “as-is” reporting. Begin with independent, direct, read-only access to the source databases relevant to the scope of work.

Actionable information is frequently hidden in the roll-up of raw data to dashboard summaries. Be prepared to rebuild fresh management views of the operation.

We have often seen well-intended and wrong “KPIs/SLAs/MBOs” where better scores track with worse results. Incentivizing wrong behavior means that greater effort may result in better numbers on the scoreboard while simultaneously producing worse outcomes.

To get an improvement initiative started in manufacturing: start with raw process and product data, quality and warranty returns, production and scheduling, and process flows. Go out into the operation and observe/collect any missing data manually (sampling judiciously) if necessary.

To get started in a service business: tap directly into the historical and real-time phone and CRM databases and any resource systems agents and front-line workers use to support clients. Listen to calls in the call center. 

Observe the “as-is” to see how past problems and workarounds have created less-than-optimum business processes. (There is always a reason that people do the things they do in an operation. Find both real and imagined reasons for why things “are the way they are”.)

Then, work with small teams of front-line workers, supervisors and managers. Start with a blank sheet – then build and test a new process to stream in when it’s ready to replace the legacy.

Ad-hoc teams formed from resources present in the existing operation have always kept our consulting footprint small. This approach generated enthusiasm for change and created a “base camp” in the organization to promote learning, teaching, sharing and improvement.

The attempt to dissect responsibilities into “strategizing”, “improving” and “doing” is an unworkable over-simplification.

The broadest distinction is created by acknowledging the limitations imposed by “available means”.  For decades we have been calling this limited authority: “Tactical”.  Tactical responsibilities are those that we expect to accomplish with available means. In the case of process work, it means the available facilities, machinery, tools, automobiles, funded staff positions, computers and so on. “Tactical” means the monthly, quarterly, and annual P&L budget.

There are a lot of ways that these finite resources can be assembled and deployed. For example, in the context of process work, a budgeted line item for process improvement gives managers and front-line workers the leeway to try, evaluate and migrate to better workflows, work setup methods, etc.

In the context of project work, an IT project manager may spend budgeted funds on cloud resources or on enhancements to on-premises equipment. We call these discretionary decisions lower case “s” strategy, since a project manager, for example, may decide to proceed with either iterative or waterfall development. Nevertheless, the project management duties of organizing tasks, resource and time to meet an objective are still tactical. Projects are constrained by a budget of resources and time.

Program Management is different. A Program Director or executive is not constrained by available means. A Program Manager may have a portfolio of projects and multiple objectives that are weighted by value and risk, and then resources are allocated accordingly. The authority for providing resources to tactical teams is what we call “Strategic” responsibility.

Strategic decision makers provision available means while weighing value and risk. These decision makers have “Balance Sheet” authority. Not limited by “available means, the strategist can decide when and where to borrow or pay off loans, increase or decrease office and manufacturing floor space, upgrade equipment and technology, change the staffing plan

At the highest (“Policy”) level, Strategic decision makers are the final arbiter of “who is our customer”; to whom and how will the company seek provide products and services. (Government, Wholesale, Retail, Market Segment, Geography, Low Cost, Premium, Luxury)  

“Quality begins with the intent, which is fixed by the management.” – Deming

In summary, we say that tactical managers and front-line workers are responsible for correct and consistent execution of work – given the available means. Strategic decision makers (Directors, Executives) are responsible for providing facilities that are capable of meeting and exceeding the customer’s expectations. Together, Strategic and Tactical need each other to produce a quality product or service.

At all levels of responsibility, there should be “doing” even though the difference in degree of responsibility results in a difference in the kind of doing.

As a placeholder for an additional article: let me mention the “red zone”, the bridge between the strategic and tactical. This role is often a gap in an organization’s resources as it requires both subject matter expertise and the ability to think about the business from both the strategic and tactical perspective.