The Delivery Gap

Close-the-GapA while back I wrote a piece titled The Strategy Disconnect where I wrote:

Millions can be spent on the ‘perfect’ strategy, but if that strategy isn’t understood and accepted by the people within the organization (and its customers), that strategy is worthless.   If that strategy isn’t grounded in reality, it is worthless.

I stand by that statement wholeheartedly. Strategy is worthless unless the people associated with your company accept it. That includes the customers of your business. If they don’t buy into your strategy, you don’t have a viable strategy.

In 2005, Bain & Company released a study titled “Closing the delivery gap: How to achieve true customer-led growth” which reported on a survey of 362 companies to try to understand how these organizations are delivering to their customers.  In that survey, Bain & Company found that “80% [of companies] believe they deliver a “superior experience” to customers. But when we asked customers, they say only 8% are really delivering.”

That’s a huge gap.

There are plenty of reasons for this gap. Bain & Company identified two main drivers for the gap:

The first is a basic paradox: Most growth initiatives damage the most important source of sustainable, profitable growth-a loyal customer franchise. To increase revenue and profits, businesses do things like raising transaction fees that end up alienating their core customers. Efforts to pursue new customers compound the problem, distracting management from serving the core.

The second is that good relationships are hard to build. It’s extremely difficult to understand what people really want, keep your promises and maintain a dialogue to ensure you meet customers’ changing needs. Even initiatives to “better understand” customers can backfire, drowning firms in a sea of data.

I won’t (and can’t) argue with those two reasons. Relationships are extremely important.  Without trust between customer and vendor, there’s very little business long-term. That trust can be eroded very quickly when companies continue to find ways to ‘nickel and dime’ a client as seen in the first driver.

There’s another driver that Bain & Company missed. That driver? Strategy.

When an organization has the right strategy in place and the right operational systems and people in place and everyone has bought into and understands the strategy, your organization will be much closer to closing the delivery gap.

 

 

Innovation needs Execution

Scot Herrick over at CubeRules had a very interesting post today titled “Innovating Like Crazy; Executing Like Crap“. Great title and great thoughts in his post, including this one:

Innovation is essential to your work. Yet delivery of the innovation is the outward and visible sign of the inward and spiritual grace that you provide to your work.

As Scot says, Innovation is essential. In fact, its critical….but execution is as critical (and dare I say more critical) because without the ability to deliver your innovations to a market, the innovation has been nothing more than an exercise to see what cool stuff can be developed.

Need an example of Innovation needing execution?

Easy…one word: Xerox.

Many innovative ideas that have shaped our world today came out of Xerox PARC….but none of these ideas were turned into marketable products that made money for Xerox. Think about the following list of innovations…and think about how poorly Xerox executed the delivery of these products to market

  • The Graphical User Interface (GUI)
  • Mouse
  • Laser Printing
  • IPv6 (arguably a standard and not commercialized by anyone)
  • pervasive computing
  • and many more

The GUI was commercialized by Apple and has become the standard for interacting with computers…as has the mouse.

Xerox PARC was (are they still?) the research and development arm of Xerox but very little of the innovative ideas that were developed there became mainstream because of Xerox. They lacked the ability to excute on delivering these ideas to market.

NOTE: I’m sure that there are those readers that disagree with me about Xerox PARC and Xerox’ inability to execute to deliver marketable products….and you may be right. My knowledge of the situation is from reading many articles, books and speaking with people who were around at the time, but I’m not an expert in this field by any means.

The moral of this story is this: Before you innovate (or at least while you innovate), make sure you think about how to execute and deliver the new ideas you are cooking up.

Thanks for the idea for the post Scot.

[tags] Innovation, Execution, Delivery, Xerox PARC [/tags]

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