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 ART & SCIENCE
Volume 1

VALUE REALIZATION

630 Fifth Avenue, Suite #1600

New York, NY 10111

2011-2012 Infosys Limited, Bangalore, India. All rights reserved. Infosys believes the information
in this document is accurate as of its publication date; such information is subject to change
without notice. Infosys acknowledges the proprietary rights of other companies to the trademarks,
product names and such other intellectual property rights mentioned in this document. Except as
expressly permitted, neither this documentation nor any part of it may be reproduced, stored in
a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing,
photocopying, recording or otherwise, without the prior permission of Infosys Limited and/or any
named intellectual property rights holders under this presentation.
 CHIEF EDITORS

Stephen Pratt
Raj Joshi
Sharad Elhence

EDITORIAL BOARD

Mathias Herzog
Prakash Jayaram
Frank Samuels
Jonquil Brookes
Oliver Siodmak
Vince Cavasin

EDITORIAL ASSISTANCE TEAM

Sameer Phadke
Manu Tyagi
Jacob Varghese
Jonathan Cohan
Gaurav Mittal
Anand Shastry

MARKETING TEAM

Amandeep Singh Syali

Varinder Verma
Jigesh Haren Shah
Navninder Singh
 IMPROVEMENT TRANSFORMATIONAL
GOALS MERCHANT

ASSETS
QUALITATIVE
ALIGNING
ENABLERS
GOODSBUSINESS
GOVERNMENT

STRATEGY ENGAGE
TRANSFORMATION

VRM
NONTRADITIONAL

CHANGE
GOOGLE
RETAILERS
EFFICIENCY
CREDIT CENTRIC
CRITICAL ELECTRONIC

FOSTER
DIFFERENTIATORS
PROCESSES ELEGANT

DELICATE STRUCTURED
INCREMENTAL
COMPETITIVE
CHAIN
CALCULATION
VERTICAL
PROCESSES
MEASURABLE
VALUE EQUATION

FOCUSED
MEASURABLE
CONTROL RELATIONSHIP
METHOD METRICS CASH

VALUE
CUSTOMER
PAYMENTS
QUO
POWER
INCUMBENT

DATA
REALIZATION SPECIAL

GAIN

REALIZING VALUATIONS
QUANTITATIVE
CRITICAL

DEVELOPMENT
UNSTRUCTURED
STATUS
ART
REGULATION

INITIATIVE SYSTEMS INCENTIVES

PREDICTABLE
SCIENCE
EXPENSIVE
MONETIZE BALANCE
FUNDAMENTAL COMPETITIVE

PURCHASE
APPROACH
MATURE
FRAMEWORK
CHALLENGING
SERVICE PROBING

Art & Science Volume 1: Value Realization

6 WELCOME 30 GUNFIGHT AT THE

Stephen Pratt O.K. CORRAL
The Changing Consumer
7 MOONSHOTS & METRICS Payments Landscape
The Art & Science of Realizing Frank Samuels and Inder Dua
Business Value
Raj Joshi 38 THE HOUSEWIFE,
THE SALES FORCE
15 THE MYTH OF BUY-IN & THE COMPANY
What SOX Taught the A Collision Course in Aisle 9
Change Industry Prateek Sinha and Sally Stuart
Holly Benson
42 METRICS WHAC-A-MOLE
19 12 GREAT APPS What Most Companies Get Wrong,
and How to Get Metrics Right
21 INTERVIEW WITH Sharad Elhence and
SALLY BLOUNT Saurabh Agrawal
Dean, Kellogg School
of Management, 48 SOCIAL BUSINESS
Northwestern University The Rise of Unstructured Data
Akash Bhatia
23 CAN YOU HEAR ME NOW?
Common Disconnects in 54 WHY PROJECTS FAIL
Product Development Improve Your Odds of Success
Jeff Kavanaugh and Olu Adegoke Pete Maloof and Brandon Bichler

29 VALUE DIAGRAM

ART & SCIENCE 4

Welcome to Art & Science,

We are thrilled you have joined us for our inaugural issue. Art & Science hopes
to share rare, human, interesting and highly practical insights into the world
of business. We take business seriously, but not so seriously that imagination,
creativity, and freedom of exploration never see daylight.

Our first issue is on a topic near to our hearts value realization.

Not the tired old view of the topic, but a view that breaks down traditional
barriers between the prima-donnas and the propeller heads, the artists and
the engineers, the pragmatists and the dreamers, the mathematicians and
the poets.

As you engage your left brain on the issue of value, we offer one cautionary
word, courtesy of the right hemisphere: beware the tyranny of numbers.
While our inner scientist may rejoice at the triumph of a carefully crafted
calculation or a five-way pivot table, our experience shows that real value
creation requires a delicate dance between the right and left brain. In the
business of value, breakthrough logic and logical connections trump
numbers. Deep thinking, probing, and challenging are the music. Logic
diagrams are the dance steps. Spreadsheets may have a place at the dance,
but only after the party is done, to clean up the place.

From all of us at Infosys, we thank you for spending some time with us.

I would like to extend a special thank you to Sally Blount, Dean of the Kellogg
School of Management, Northwestern University, for her contribution to this
issue.

Stephen Pratt
Managing Partner - Worldwide Consulting & Systems Integration
Executive Council Member

ART & SCIENCE 6

by Raj Joshi

MOONSHOTS & METRICS

The Art & Science of Realizing Business Value

I
n the early years of the space race, the United States
was repeatedly bested by the Soviet Union. Sputnik
was just the first shot over the bow. In 1961, the
Russians shocked the U.S. by sending a man into space.

Within weeks, President Kennedy decided to change the

rules of the game. Instead of continuing to fight toe-to-
toe on his competitors terms and turf, he set the nations
sights on a more far-reaching goal: sending a man to the
moon and back by the end of the decade.

7 ART & SCIENCE

 Moonshots & Metrics

It was an audacious vision. It would realizing value from their operations. They
require unmanned test flights, focus on a philosophy of continuous
development of a lunar landing craft, improvement. But that approach usually
testing of new fuels, boosters and engines, leads only to minor incremental change.
and a host of other challenges.
Instead they need to invest in a true
But his was more than just an empty transformation of their business
rallying cry. Kennedy plowed enormous processes. Thats the key to delivering real
resources and investments into the business value and creating a measurable
program. In the first year uptick in shareholder
he tripled the space Realizing business or customer value.
budget. And over the value through measurable More than remaining
next five years, NASA competitive, its about
improvement in business
doubled the number driving step-function
of scientists and process metrics is both change and coming out
engineers involved. an art and a science. on top. And that should
be the priority for every
So while the Soviets continued to prove operations leader.
a formidable opponent in the space race
and won their share of victories over the It is, however, easier said than done.
next few years, the U.S. ultimately claimed Establishing a cause-and-effect relationship
the big prize, essentially leapfrogging the between process change and things like
competition. increased revenue, reduced need for
working capital, and/or reduced cost is
CHANGE MUST BE difficult at best. What is easier and more
TRANSFORMATIONAL practical, though, is to measure business
The lesson? Too many organizations value through material improvement
are thinking small when it comes to in quantifiable process and operational

Establish a direct link between measurable process improvement and realized value

Business Strategy

Business Transformation Objectives

Business Process Level 0 Business Process Level 0

Business Process Objectives

Business Process Metrics

Business Process Objectives

To-be Environment
Business Process Metrics
As-is Environment

Business Process Level 1 Business Process Level 1

Business Process Level 4 Business Process Level 4

Business Transformation Solution

Realized Value

ART & SCIENCE 8

by Raj Joshi
metrics.
Transformation initiatives that are
designed to dramatically enhance the
efficiency and effectiveness of business
processes typically tend to be complex,
risky and expensive. Its not easy to realize
aggressive game-changing goals and
targets that will truly make a difference
to the organizations positioning in the
market.
Not surprisingly, transformation journeys
often result in underachieving
outcomes but it doesnt have to
be that way.
THE VALUE
REALIZATION
METHOD
Achieving a specific
improvement in business
process metrics will drive
measurable business value
and this is the premise of
the Value Realization Method
(VRM).
VRM is a framework that provides
a structured approach to delivering
measurable business value. It creates
more predictable outcomes. It enables
organizations to align operations with
strategy, thereby making processes more
effective. And it gives company leadership
the confidence and fire-power to make
courageous decisions that will drive
dramatic change for the better.
Realizing business value through
measurable improvement in business
process metrics is both an art and a
science.
The art of the game comes into play
when leadership must manage diverse,
intangible interacting factors to achieve
desired process change such as the
talent of the team, level of motivation,
desire to innovate, knowledge of the
9 ART & SCIENCE
business, acceptance of change and
evolving customer expectations.
The scientific element is invoked through
logic and structure that enables process
redesign and the use of technology to
drive process efficiency.
So if there is indeed a way to establish a
game plan that works, why do business
transformation exercises tend to under-
deliver and not meet expectations?
SETTING EXPECTATIONS IS
CRITICAL
The first key to success
is to set the right
expectations. Before diving
into an expensive transformation
exercise, it is critical for an
organizations leadership to clearly
articulate the overall strategy and to
identify a clear burning platform
for the transformation.
From there, leaders must define the
destination for the transformation
journey, outline the change imperative
and develop a tangible business case.
A RECIPE FOR MEDIOCRITY
Consider the case of a multi-billion dollar
company that had seen a gradual erosion
of its position in the market. In a highly
competitive industry with razor thin
margins, the organization had consistently
lagged the competition in key financial
measures such as market cap-to-revenue
and price-to-earnings ratios.
The companys competitors were simply
more efficient, and were thus rewarded by
Wall Street with higher valuations. As the
stock price declined, the board became
restless. If the market cap continued to
slide, it would not be long before the
company became a takeover target.
At the urging of the board, top
 Moonshots & Metrics

Right Time for Transformation?

3

2.5
COMPANY
Revenue 2
Multiple COMPETITOR B
Ratio * 1.5
COMPETITOR A
1

.5

0
2006 2006 2006 2006 2007 2007 2007 2007 2008 2008
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

From 2006 through the middle of 2008, the competition had clearly out-performed the company. By Q2 of
2008, it was clear that the company had to take strong decisive action because incremental improvement
was not making an impact. Management had no other option but to launch a transformation initiative.

*
Revenue Multiple Ratio = Competitors Market Cap to Revenue Ratio / Companys Market Cap To Revenue Ratio

management instituted several change especially for mature companies that

initiatives to curtail costs and improve have been in business for many years.
performance in the field, including: They tend to evolve on an incremental
basis, taking small steps to maintain the
Resetting the incentive mechanism status quo rather than leapfrog. But in
for the sales function; todays environment, thats a sure-fire
way to lapse into mediocrity.
Focusing
more attention on inventory
management (being a distribution- And investors tend to punish mediocrity.
centric
Executing a complex business
company); and So, the company
transformation initiative that decided to launch
Fine-tuning
actually delivers on its expectations a major business
the guts of its transformation
is hard some would liken it to
operations its initiative to
core processes a death-march! dramatically alter its
and enabling core processes and enabling
systems. technologies, outpace the competition and
deliver superior financial performance.
Although the organization did respond Top management developed and
and deliver incremental gains, the committed to a compelling business case.
competitors seemed to actually enhance The die was cast.
their position in the market and
continued to enjoy healthier valuations But that was the easy part.
(see chart above). It was clear that
incremental improvement was not THE DEVIL IS IN THE
cutting it. EXECUTION
Executing a complex business
The burning platform couldnt be more transformation initiative that actually
stark: achieve dramatic improvement delivers on its expectations is hard
(as measured by key operational and some would liken it to a death-march!
financial metrics) or perish! Clearly, the challenges of such an
initiative should not be underestimated.
This is not an uncommon situation

ART & SCIENCE 10

by Raj Joshi

FIVE PRINCIPLES OF VRM

1 2 3 4 5
Align processes Drive measurable Measure business Integrate Set audacious goals
with strategy to improvement in value through both enablers of process to foster innovation
drive organizational business process quantitative and efficiency and cause paradigm
effectiveness metrics qualitative metrics shifts

But case studies and our experience

suggest that adopting a structured
approach with a keen understanding
and awareness of certain fundamental
principles can make a material difference.
Thats where VRM comes in.
FIVE PRINCIPLES OF VRM
The ability of VRM to deliver
measurable business value rests on five
core principles.
2 DRIVE MEASURABLE
IMPROVEMENT IN
BUSINESS PROCESS METRICS
Moving the needle on key metrics of a
business process is a clear, unambiguous
measure of improved process efficiency.
For example, if an organization took 15
days to go from quote-to-shipment for a
normal order but after transforming the
business process the same order now takes

1 ALIGN PROCESSES
WITH STRATEGY TO DRIVE
ORGANIZATIONAL
5 days for processing, then this is a clear
indication of improved process efficiency
and therefore business value.
EFFECTIVENESS
The trick, of course, is to figure out a way
Realizing maximum business value can to deliver this material improvement. And
only be attained when the organizations therein lies the challenge.
business processes (measured through
process objectives Too many organizations
and metrics) are in The most elegant spend millions of
complete alignment business process in the dollars redesigning
with business strategy business processes
and operational and world means little if its
and building
financial goals. If not accompanied by a supporting technology
every activity within
material improvement in solutions only to
a business process is
structured to support process metrics. end up with little or
the broader business no improvement in
strategy, then all of the process metrics. While
organizations assets are aligned in a a structured, methodical approach can
common direction and are therefore facilitate and guide change, thats just the
more effective. science. Only by also mastering the art
of the game deep knowledge of the
Without a structured, methodical business and a creative and innovative
approach to analyzing and refining mindset of the team members will
operations at periodic intervals,
material change occur. The most elegant
material inefficiencies are almost
business process in the world would
guaranteed. Most global Fortune 500
companies today can stand to benefit mean little if it is not accompanied by a
by taking an analytical look at how their material improvement in process metrics.
processes and strategy are aligned.

11 ART & SCIENCE


3 MEASURE
BUSINESS
VALUE THROUGH BOTH
QUANTITATIVE AND
QUALITATIVE METRICS
While the quantitative or
tangible measures of time,
effort, cost and quality are
clear indicators of process
performance, softer intangible
metrics such as customer
and employee satisfaction,
organizational risk and brand
can play a significant role in
creating or destroying
business value.
For instance, an airline
facing cost pressures could
consciously reduce the
cost of customer service,
and therefore run the
risk of reduced customer
satisfaction, leading to loss
of business and business
value. For consumer
packaged goods companies,
the value of brand is
very important, so they
tend to invest a lot more in
quantitative measures such as
product quality and available
or on-hand inventory.
It takes a balance of
quantitative and qualitative
metrics to drive maximum
business value.
4
INTEGRATE
ENABLERS OF
PROCESS EFFICIENCY
Lasting operational change
that delivers measurable
step-function business value
can only be realized if the
solution effectively integrates
four key enablers: process,
Moonshots & Metrics
CASE STUDY:
Aligning Processes & Strategy
It was the height of the tech boom and the telecom
industry was busy building Americas broadband
data highway. The North American unit of a global
telecom equipment manufacturer was consistently
losing the lucrative #1 supplier position to its
competition. While the secondary supplier role
helped maintain the companys revenue, losing
market share during this high-growth period was
not acceptable to management.
After some analysis, the operations team came
to the conclusion that the company was being
dinged by its customers for consistently missing
delivery dates. The vice president of operations
theorized that the inconsistent order delivery
track record was a key contributor to poor
customer satisfaction and this had a direct
causal impact on market share.
Soon thereafter, management started
measuring the operations team on the percent
of orders that met the customers delivery date
expectations. It was not long before the company
started hitting close to 100% of delivery date
commitments. Its true you get what
you measure!
But instead of improving, customer satisfaction
actually dropped. And market share followed
suit. It was time for some introspection and
forensic analysis.
After digging into the problem, the operations
manager realized that the company had shipped
partial and incorrect orders. The operations
team had prioritized delivery dates above
everything else and the company had paid the
price for the mistake.
Once the problem was accurately analyzed, the
solution was reasonably simple. The operations
managers decided to measure quality of orders
shipped in addition to the delivery dates. Sure
enough, it did not take long for customer
satisfaction to improve and market share
started moving up.
It is a known fact that metrics drive behavior. So if
the wrong metric is measured then the resultant
behavior can deliver an undesirable outcome.
It is also critical that there be strong alignment
between organizational strategy, process
objectives and related process metrics. In this
case, the targeted metric taken in isolation was not
aligned with the objective of improving customer
satisfaction and market share.
By focusing on the right set of metrics, and aligning
them with strategy, the organization was able to
realize value and achieve its goal.
ART & SCIENCE 12
by Raj Joshi
technology, data and people. Although
integration of these enablers can be
complex, done right, it can create non-
linear value for the organization.
Technology, primarily applications
software, tends to be the big-dog in the
transformation game and the interplay
between business processes and enabling
technology will consume the bulk of
the transformation bandwidth. But the
importance of the other enablers should
not be underestimated.
Take the people enabler, for instance
(commonly referred to as Organization
Change Management). Employees
acceptance of change can make or
break a program. Leadership
must make the case for change
and employees must buy
into it and thereafter be held
accountable to deliver the
change. Moreover, people must
be given the tools
and training necessary to operate
in a different way and deliver the targeted
business value.
Data, too, plays a critical role. Having
access to the right data at the right time
to make the right decisions can be a huge
enabler to realizing business value. The
ability to consistently make the right
decisions, time after time, requires a finely
tuned and synchronized process to push
the data out to the managers. Absence
of data, or the wrong data, on the other
hand, leads to guesswork and that can
lead to bad decisions.
5 SET AUDACIOUS
GOALS TO FOSTER
INNOVATION AND CAUSE
PARADIGM SHIFTS
President Kennedys audacious goal
spurred rapid innovation in the space
13 ART & SCIENCE
industry. There have been similar
instances in the business world where the
need to leapfrog the competition caused
organizations to set audacious goals that
fostered innovation and helped change
the rules of the game.
When companies embark on a
transformation journey, they are typically
encumbered by knowledge of whats
possible and awareness of the constraints
of their business processes and supporting
technology. By setting audacious goals,
leaders can empower the transformation
team to think beyond the normal and
ignore current limitations. When this
happens, it sets the stage for
mind-blowing innovation that
can radically reposition the
company in the market.
The business value of
innovation, however, can only
be confirmed and validated if
the changes lead to measurable
improvement in process
metrics and therefore, business
process performance.
Launching a transformation initiative is
a big bet on the future. Organizations
take a calculated risk because the measure
of success can become a moving target.
What may have seemed like a reasonable
definition of success two years ago
during launch might not mean much if
competitors have leapfrogged through
their own transformation. Or if dramatic
improvements do actually occur but at twice
the budgeted cost.
A well-formulated business case that
delivers a return on investment based
on targeted benefits and costs can
provide good direction. But in reality,
things change and companies often
end up ignoring the original business
case. Without this compass as a guide,
 Moonshots & Metrics

transformation journeys inevitably realization of business value.

take longer, cost more and experience
unanticipated twists and turns.
Along the way, success at innovation could
provide interesting wins in unexpected
areas, and adopting a structured
methodology for executing the program
will create operational efficiencies. But
in the end, sticking to the basic premise
of achieving measurable improvement in
process metrics and, therefore, process
performance, is the only way to guarantee
One thing is for sure doing nothing is
no longer an option. Companies must
constantly monitor their metrics and
their competitors performance, and be
ready to change often to stay relevant in
the market. And while transformation
programs are anything but easy, done
right with a little art, some science, and a
whole lot of inspiration and perspiration
business value can indeed be realized.

About RAJ JOSHI

Raj is a Global Managing Partner with Consulting & Systems Integration

unit in Infosys.

Raj has been in consulting for 23 years; during that time, he has become an
industry expert on Business Transformation. He is also the key architect of
the Infosys Value Realization MethodTM.

Raj has an MBA and a Masters in Chemical Engineering. He was named

one the worlds top 25 consultants in 2008 by Consulting Magazine.
Raj_Joshi@infosys.com

Q&A
Q How long have you been in Q Are you left brained
consulting? or right brained?
I have had to change my stripes three I was left brained for the first 25 years
times in my career as a consultant. of my career. Over the next 25 years, my
So, although I have been in Consulting right brain has caught up. So as of now,
for 23 years, it seems like I have been the answer is both.
doing this for only seven years!
Q What is your favorite song?
Q What stands out in your mind as
you look back over the past 23 Dream On by Aerosmith.
years?
The chance to be an entrepreneur
with two great firms: first with Deloitte
and then with Infosys.

ART & SCIENCE 14

by Holly Benson

THE MYTH OF BUY-IN

What SOX Taught the Change Industry

W
hen Sarbanes-Oxley burst onto the scene
in 2002, it was an unwitting poster child for
effective change management. In less than
a year, the SOX reforms swept through American
industry; thousands of companies implemented the
stringent, at times even draconian, provisions with nary
a whimper. Sarbanes-Oxley slammed full-force into
corporate America and then just noiselessly slid in.

For anyone really watching, the experience was a change

management Rosetta Stone. Sarbanes-Oxleys rapid and
easy implementation offered a striking template.

15 ART & SCIENCE

 The Myth of Buy-In

WHAT WORKED? Buy-in is essentially an unwavering

The legislative mandate, and its particulars, confidence that a new system will work.
were exceedingly clear. Companies invested How do we get there? Proof. Proof that a
liberally in making sure that the message system works, that processes perform as
was not only heard, but understood. promised, that training is adequate, that
Employees were drilled on the new jobs are secure in short, proof that the
provisions. And the threat of jail time for individual will be as successful in the new
breaches loomed large in the C-suite, so regime as in the old. In other words, buy-
CEOs and CFOs drummed accountability in follows adoption, rather than driving it.
into their work forces in a way that left no
room for either doubt or protest. So most transformation programs, which
focus on buy-in, are putting the cart
WHERE ARE WE NOW? before the horse. You cant expect buy-in
A decade later, many of the same until youve achieved the promised gains.
companies and their consultants
seem to have forgotten this lesson. RIGHT ACTION
Organizations that adopted SOX flawlessly For most business transformation
are struggling to get traction for new ERP, programs the vast majority the focus
digital commerce, shared services or other needs to be on what we call right action.
transformation initiatives. And theyre Again, the Sarbanes-Oxley experience
struggling because, in many cases, they holds the key.
are doing the absolute
inverse of what worked What we have is not Good change management
so well in 2002. doesnt focus on tracking
a psychological, lie-down-
how people feel, or on
Instead of taking a on-the-couch, how-are-you- making them feel happy
pragmatic, tactical feeling-about-your-new-job it focuses on making sure
approach to changing problem; its a leadership that they take right actions
employee behavior, in a critical time frame.
problem
most companies are
chasing an elusive quarry It means getting people
called buy-in. Rather than making ready to execute flawlessly on Day 1
sure that employees are clear, prepared, of the new business environment. And
and accountable, they are making sure being ready means being crystal clear
employees are happy and aligned. about their obligations, mastering the
skills to succeed, and accepting hard
Because the focus is misplaced, employees accountabilities that tie choices to
too often are confused about whats personal outcomes.
expected, frustrated because they lack new
skills or the confidence to apply them, LEARNING FROM SOX
and emboldened to ignore expectations Countless published studies have
because they know there is demonstrated that people problems are the
no accountability. number one cause of failure in large-scale
business transformations.
WHATS WRONG WITH BUY-IN?
Theres nothing wrong with happy And we submit this is because the change
employees. But the issue with buy-in, industry has been approaching people
when youre changing fundamental problems in the wrong way for the past 20
business processes, is time. years. What we have is not a psychological,

ART & SCIENCE 16

by Holly Benson

Good change lie-down-on-the-couch, how-are-you-feeling-

about-your-new-job problem; its a leadership
management doesnt problem that requires more of an on the bus
focus on tracking how or under the bus approach.

people feel, or on making When it came to Sarbanes-Oxley, corporations

them feel happy it invested in training employees on exactly what they
needed to do. They were trained in classrooms,
focuses on making sure and online. Employees knew what
that they take right they needed to do (or sign) on Day 1.

actions in a critical In addition, there were clear consequences.

Do this, or go before the SEC. Any questions?
time frame.
This experience teaches us that, however
counterintuitive it may seem, a hard-lined approach
to the supposed soft stuff is the number one
way to make sure business case benefits flow to the
bottom line.

When Buy-in Works

Interestingly, buy-in based change programs can work but only in a
singular circumstance. They work when the time frame is open-ended.
Based on the science of product diffusion how product innovations
diffuse through a marketplace these programs focus on attracting
end-users to a future state, and on enticing a critical mass of early
adopters as quickly as possible, who ultimately create a tipping
point.

Consider, for example, a familiar device. In the 80s, a novelty

called the car phone hit the scene. A province of the super-
wealthy, it was only to be used in dire emergencies. Over time,
the car phone was adopted by more and more business people
as a convenient way to return calls while driving to meetings. And
then one day, the car phone became untethered. Even reluctant
technophobes bought in to the convenience of having what was
now called a cell phone. And thirty years later, 77% of the worlds
population (5.3 billion people) carries a mobile device.

The defining attribute of the car phone story and other buy-in based change
programs that work is their open-ended time frame for adoption. In reality, this
is anathema to most major business transformations, where there is a hard go-
live date and a requirement that every person perform as expected on Day 1.

17 ART & SCIENCE

 The Myth of Buy-In

About HOLLY BENSON

Holly is a Partner in the Organizational Transformation practice of Infosys

Limited. She is also an expert in Shared Services strategy
and design.

A 30-year business veteran, Holly spent the first half of her career in
petroleum exploration. While still with a Fortune 10 oil company, she
became fascinated with questions of strategy, leadership, and organizational
change, which ultimately led to a career change. Now she brings her pragmatic
management experience to clients, helping them find realistic solutions to the
Holly_Benson@infosys.com vexing people and organizational challenges of business.

Holly holds a B.A. and M.A. in Geological Sciences and was named one of
Consulting Magazines Top Women in Consulting in 2008.

In her spare time, Holly owns a mineral and fossil gallery and a coffee bar in
Taos, New Mexico and paints in watercolor and oil.

Q&A
Q What is the strangest thing youve Q What would you never
ever been paid to do? be caught without?
Model the basin subsidence and A sense of curiosity. And a clean
hydrocarbon maturation profile of the conscience.
Michigan Basin. Not what youd expect
from an Organizational Transformation Q Favorite song.
consultant, is it?
Rolling Stones, Honky Tonk Woman.

Q If you had to boil all your

consulting knowledge down to Q Favorite airport.
one principle, what would that be?
Albuquerque (ABQ): Pueblo
Clarity: of role, strategy, direction,
architecture and a great art collection.
objectives, values and priorities.
Lack of clarity is the taproot of all
evil in business.

ART & SCIENCE 18

 Zosh Kayak

Dropbox TripIt

Wikipanion Flighttrack Pro

Flipboard SoundHound

Instapaper Pandora

OmniFocus Audible

No {Truly}
Smartphone
can be Without

19 ART & SCIENCE

M any in the tech industry say the iPad and the iPhone changed
everything so quickly that in a very few years even laptops
will be gone. Meanwhile, over a hundred tablet computers debuted
at this years Consumer Electronics Show in Las Vegas, all hoping
to displace the iPad. And smartphones running Googles Android
operating system are beginning to challenge the iPhone. Technology
is changing the way we interact with each other and the world with
whiplash-inducing acceleration.

Nevertheless, its not only the device that is having the ultimate impact: its the software.
And software in the future will be distributed to us as apps, small applications that we
download from our platform vendors app store. Apples iTunes Store has already caused
a revolution in software development and distribution, providing everything from rock
concert lighters to calorie counters, star charts and bar code readers.

Not far in the future, well see apps that remotely manage health conditions and report
back to the physician, and apps that can turn on your homes lights, air conditioning, and
washing machine and your car.

Today there are over 350,000 mobile apps in the iTunes store, and almost 100,000 for
Android. But if you are in business, the number you actually use drops precipitously.
Here are our favorite must-haves for productivity, travel, and enjoyment:

PRODUCTIVITY:
On the road and need to sign something?
Fill in and sign electronic documents
on the go with Zosh. For syncing files
between desktops and devices, theres
Dropbox, and for reading Wikipedia on
a 4-inch screen, try Wikipanion. Catch
up on the news with Flipboard, your
personally-curated magazine for iPad, or
save it to read later withInstapaper. Get
more done with OmniFocus,a powerful
task manager with live, automatic
syncing, location-aware custom actions
lists, and on-the-fly task entry.
TRAVEL:
Kayak is currently the best mobile app
for finding flights, comparing prices, and
making reservations. Once you have an
itinerary, email it to TripIt,an excellent
way to manage all your travel plans in one
place. Then see if your flight is on time
with Flighttrack Pro, a must-have for
road warriors who need to stay on top of
weather delays and airport maps.
ENJOYMENT:
Because life isnt all work, your
smartphone should also have
SoundHound, the nearly magical music
identifier that can listen to ten bars of a
song you sing (even off-tune), and tell you
its name and where to buy it. Pandora
is for custom-generated internet radio
stations, and Audible is a must-download,
where first-rate narrators read books aloud
that you would never have time to sit down
and read.
Weve left off this list the apps that
probably manage your personal life:
your Mint personal finance software, the
American Express app, your online banking
app, and lest we forget, Facebook. But you
already knew about those.

ART & SCIENCE 20

 Dialogue
with Dean
Sally Blount
Dean, Kellogg School of Management,
Northwestern University

1 We know the common answers, but what three or so uncommon

characteristics make a great business leader?

Holism a leader must have the ability to identify, articulate and

protect the core of the organization, as a collective, separate from
the needs and demands of any single individual or group within the
organization.

Grit leadership requires perseverance, courage, and canniness all in

one day after day after day after day.

Gratitude remembering that no matter how challenging the job of

being the leader can sometimes get - doing what we do in this time and
place were so incredibly blessed.

2 What is the biggest surprise you have experienced in your role

as leader of one of the worlds leading educational institutions?

Learning once again how important communications, both tactical

and strategic, are to leader effectiveness. I feel like I keep learning that
lesson over and over, at every stage of my career. I learned it in the
classroom as a professor at the University of Chicago. I learned it in
my first deans job at NYU. And I have just learned it again during my
first year on the job here at Kellogg. Being a dean requires meeting the
needs and expectations of an incredibly broad range of stakeholders
from students, faculty, professors, alumni, trustees to global partners
and the media. Doing that well is all about effective communicating.

3 Is social networking and texting helping or hurting the

education of our future leaders?

On the upside, it is clear that social networking and texting have

accelerated some aspects of how our future leaders organize their
thoughts, share ideas and mobilize collective action. These tools have
also empowered them to be networkers very early in life.

21 ART & SCIENCE

 On the downside, as a psychologist, I worry about how these tools may
promote shortened attention spans, which may inhibit the long-term
ability to engage in complex problem solving. They may also mean that
many of our future leaders have less experience than prior generations
in building meaningful one-on-one relationships before entering the
workplace. I see it with my own children so much of their relationship
building is done on-line in very public forums.

4 Women leaders have great, and largely untapped, potential for

businesses. How can CEOs do a better job in this area?

Flexibility and creativity in structuring jobs and managing career

progressions for women are essential. My own career offers a vivid
example of a female leader who almost wasnt.

Early in my career, as a professor and working mother trying to get

tenure, both of my children encountered some difficult circumstances
that required extra attention. And this was in the years before academic
institutions were stopping the clock or granting parental leave, so it was
tough. But even so, academics offered a work environment that allowed
me flexibility regarding when I put in my hours I could do it nights and
weekends, as long as I got the work done. So I was able to give my children
the attention they needed during those periods without derailing my
career (just my sleep!).

Without that flexibility during those early years, I would have left the work
force to care for my children. I know many well-educated bright women
who did not have the same flexibility at work and did quit. Now that our
children have grown, they are struggling to find meaningful work upon
reentry. Thats a net loss to our society.

5 What is the most common mistake companies make in business

strategy? What is your favorite example of strategy gone bad?

The most common mistake I see is a lack of coherence in strategy setting

and execution. Strategy is all about making clear plans and sticking to
them. Yet, organizations get easily distracted in both tasks. Theres a
great new book by two Kellogg alumni written on this topic: The Essential
Advantage by Paul Leinwand and Cesare Mainardi.

6 Music is very important to our company. What is your

favorite song?

One of my favorite groups is Everything But the Girl, and if I had to pick
one of their songs that has spoken to me over the years, it would be We Walk
the Same Line. It speaks to me of what I try to bring to my relationships as a
mother, a partner, a daughter and sister, a friend and a leader.

ART & SCIENCE 22

by Jeff Kavanaugh & Olu Adegoke

CAN YOU HEAR ME NOW?

Common Disconnects in Product Development

A
t Apple, the now-iconic company that brought
us the Macintosh, the iPod, the iPhone, and now
the iPad, the final gating factor before a new
product launch is always the CEO, Steve Jobs. Conversely,
at Google, it often seems to be no one; Google Labs is an
almost automated launch pad for products that may not
be ready for prime time, but are brought out for trial runs
and quickly iterated or removed.

23 ART & SCIENCE


Hardware product development is
known for taking time and needing to
get it right, since mistakes with physical
components carry a high cost. Even
though virtual prototyping and 3-D
printing are starting to change the
economics of scale, most companies still
adhere to the risk-conscious measure
twice, cut once philosophy of physical
product development. Even Apple has
to make sure its products are designed
and produced correctly for the market.
On the other hand, software product
development is legendary for its speed
and competitiveness as portrayed
in The Social Network, Facebook
was launched quickly and
followed with rapid tweaks
that continue to this day.
Unfinished products
are often released
to the market, whose
feedback is used to finish
the product development cycle.
These companies operate on the
principle release early and often, with
rapid product iteration and improvements.
Thats how you disrupt markets.
But not every company is Apple or Google,
and not every new product aims to be
disruptive. Some, like Diet Coke, are brand
extensions, and others, like Toyotas Prius,
are responses to market forces. Others,
like a telecom companys voice + internet,
can be a bundled offering, and theyre all
necessary to the shareholder value of an
enterprise.
New product development is the lifeline
of any company; its what sustains growth
over decades, even centuries. But in tough
times, companies are tempted to cut R&D
dollars, and avoiding some common pitfalls
can be a force multiplier.
THREE DISCONNECTS
There are three critical disconnects we see
regularly in new product development.
Can You Hear Me Now?
The first one occurs between customer
needs and company priorities. While an
overly zealous devotion to customer input
can be limiting, most non-tech companies
err in the opposite direction, and customer
needs take a backseat to internal priorities.
This overemphasis on company financials
is especially prevalent in economic
downturns, when R&D funding comes
under pressure.
The reality is that a balance is required, and
new products should be developed that
demonstrate a link between customer value
and company value.
This requires strategies similar
to those used by software
companies: multiple,
small, agile releases
that quickly gather
feedback and iterate.
The next disconnect is between
individual new products and the
portfolio of existing products already
being produced. New product decisions
tend to be made in isolation, disconnected
from their impact on the overall product
portfolio. Products are too often judged
and funded on their individual merits, or
worse, on political considerations rather
than on their relationship to other products.
The Apple iPod products (Classic, Nano,
Shuffle, and iPod Touch) are examples of
products proactively developed to be a
family, rather than as isolated offerings.
The third disconnect is between a new
products estimated value at inception and
its realized value after launch. Even if the
original business case is approved with a
portfolio perspective, most companies fail
to update the estimate of product
value contribution over the development
process, or against an updated view of the
product portfolio. They figure that value
determined once is value forever. But this
ART & SCIENCE 24
by Jeff Kavanaugh & Olu Adegoke

is never the case. Customer needs change,
product portfolios change, and new product
specs often need to change to keep up.
Connecting these common gaps in product
development can help companies convert
the usual challenges into powerful enablers
for long-term growth.
CONNECT THE GAPS
environment. Theyre dialed into customer
needs and cooking up new ideas and
products. Their whole reason for being
is to optimize the customer experience,
and theyd like to do so without cost
constraints, thank you very much.
They brainstorm ideas all day long.
On another floor, or in another building, the
suits are hard at work in walled offices,

1 CONNECT THE COMPANY

TO THE CUSTOMER
The most radical example of connecting
thinking about productivity and efficiency,
and preparing presentations to senior
management that calculate net present value
the companys priorities with those of the and return on investment. They look at cost
customer is perhaps Threadless, a Chicago to serve and how to optimize processes.
company where customers have a direct say
in every product the company offers. Smart companies are finding ways to bring
the two together, so customer and company
Heres how it works: Threadless customers value can be integrated in every new
submit designs, a community of online users product, and not viewed in isolation.
votes on their favorites, and only
those shirts get made. The result? Every This is so critical because the starting
t-shirt the company point for any new product
produces sells out. The most radical development process is
As Inc. Magazine put example...is Threadless, generating effective ideas.
it, at Threadless, And these ideas must
where customers have a
the customer is be based on a thorough
the company. direct say in every product understanding of customer
the company offers. needs the kind of
This seamless (if understanding that comes
you will) integration between customer from first-hand knowledge shared by
research and product development is a cross-functional team of marketing,
something most businesses can only dream product, engineering, and operations
of. Product development personnel.
is guided entirely by the customer.
So thats the first step: bringing together a
According to an APQC study, only about cross-functional team to sift through and
a third of businesses include customer evaluate new product ideas.
research and metrics in their new product
development process. The rest measure These ideas then need to be weighed
success solely on internal factors (will against both internally focused criteria
the product make money? Can we ship it like technical and commercial feasibility, and
according to our plan?). customer-centric criteria like user experience
and cost. In practice, you need only a limited
At many companies, this internal/external set of well-selected criteria measuring
divide is an ingrained part of the culture, company and customer value to help make
and thats where the problem starts. On one effective decisions. Dont make it more
side you have the creatives, off in a separate complicated than it has to be.
building with purple walls, bean-bag chairs
and a no cube innovation-encouraging Once you get going on a new product,

25 ART & SCIENCE


dont lose the voice of the customer. As
the product development process moves
along, the customer voice tends to be
gradually drowned out. Engineering takes
over, and the product marketers who talk to
customers no longer stay involved.
Dont make this mistake. Product marketers
must stay attached from idea to execution.
Another way to maintain the customer
voice is to observe lean startup
principles. Some products perform better
when an early, less functional version is
released to customers. So in the case of
Google Labs, users are invited to play
around with prototypes of the companys
latest ideas, and offer
feedback directly to the
engineers who developed
them. The process is
highly iterative, unlike
waterfall development,
which assumes that
once decisions are
made, downstream
stakeholders must live
with them.
A final way to maintain the voice of the
customer is to actually observe them using
your products. Procter & Gamble has
been an avid promoter of this technique,
actually going into customers homes to
observe how they use dish soap, or how
they handle laundry detergent. Business-
to-business companies could learn a lot by
adopting a similar approach.
2 CONNECT THE NEW
PRODUCT TO THE
COMPANYS PORTFOLIO
The strength of a business lies in having
a portfolio of products to meet different
customers needs. But companies too
often view individual projects in a vacuum
instead of balancing their portfolios.
An effective portfolio management
Can You Hear Me Now?
strategy channels resources toward the
most promising products, and aligns new
product development to the companys
overall strategy: Are you a market leader
or fast follower? An Apple or a Microsoft?
Each has different product development
needs, in terms of speed-to-market and
level of innovation. Is this the right product
lineup to provide a competitive edge or
market leadership?
A portfolio approach can also save money.
In the auto industry, designing similar
chassis for multiple vehicles has enabled
car companies like Toyota to leverage
technologies across their products,
significantly reducing R&D complexity
and costs. And Apple has
accomplished a similar
benefit by leveraging
common sources for glass
and chips in its iPod, iPhone
and iPad products.
While all product
managers in a company
may benefit from
improving underlying
capabilities, no one person or function
wants to bear this cost individually as part
of her own project. To do so would likely
drive any project below acceptable business
case justification.
So strong leadership is required from
the CEO, chief product officer, and line
business executives, not only to implement
an effective portfolio management strategy,
but to sustain it over time.
3 CONNECT THE PRODUCT
TO ITS BUSINESS CASE
Although nearly all companies estimate a
products potential value at the beginning
of the product lifecycle, most of them stop
there. They create the business case, get
it approved, and then it gathers dust on a
shelf somewhere.
ART & SCIENCE 26
by Jeff Kavanaugh & Olu Adegoke

Instead, companies should revisit the value as a quality control checkpoint where yes/
equation at specific, defined intervals. A no decisions are made on whether or not
stage-gate management process provides a to move forward.
ready mechanism for this.
While this sounds obvious, and all
Stage-gate management breaks the companies do this in some manner, few
innovation process into multiple stages,
actually take full advantage of what stage-
with each one consisting of a set of tasks.
gate management can offer. Beyond quality
There are typically four or five major gates
assurance, it can be a powerful tool to lean
from business case generation through out the product pipeline and maximize
product launch. The gate typically serves
yield on investment. Think about it: how
much of your design and
testing resources are spent on
features that customers do not
About Stage Gate Decision-Making: value, or for which the financial
assumptions are no longer valid?
The stage-gate process optimizes
resource allocation through each
CONNECTIONS = VALUE
phase of the product development Though product development
process, from idea generation to is probably the most important
launch. It can ensure that ideas dont enterprise process, many
go any further than their merits allow product launches fail to meet
at any given time.
expectations. There is significant
One of the greatest advantages of potential for improvement in
stage-gate management is that both top-line revenue growth
spending can be low at the beginning and more effective allocation of
and increase in a non-linear manner
resources. Success depends on
as stages are completed. If problems
closing the gaps in the process.
are addressed or prevented in the
early stages, more resources can
be committed to new products and New product development
features with the greatest potential for efficiency and effectiveness
customer and financial success. can be built upon a few time-
Implemented correctly, stage-gate honored principles: connecting
management can improve teamwork, company and customer value;
accelerate products to market, give effective portfolio management;
structure to the innovation process, and updated value measurement.
reduce rework and improve success
rates on new product deployments
Taken together, these principles
Before moving on, ask these questions: form a practical framework for
Are the objectives the same as exceeding customer expectations
when we started? while delivering financial and
operational success.
Are these the right activities to
meet those objectives?

Are the features still appropriate?

Are we on track to achieve the

intended value?

27 ART & SCIENCE

 Can You Hear Me Now?

About JEFF KAVANAUGH

Jeff is a Partner in the Manufacturing practice of Infosys Limited. He is

also responsible for some of the firms strategic clients.

Jeff has been in consulting and industry for more than 20 years; over that time
he has become a noted expert on product development and supply chain.

Jeff has an MBA and Bachelors in Electrical Engineering, and is a Lean

Six Sigma Master Black Belt.
Jeff_Kavanaugh@infosys.com

About OLU ADEGOKE

Olu is a Senior Principal in the Communications, Media and Entertainment

practice of Infosys Limited.

He is a 16-year veteran of the communications industry. During that

time, he has helped launch two wireless service providers and one mobile
payment company, and has worked with established companies like Cox
Communications, AT&T, Verizon, Belgacom, Portugal Telecom, Equant,
and Orange.
Olu_Adegoke@infosys.com
Olu holds an MBA in Finance and Strategy from Cardiff Business School,
University of Wales, UK and a Mechanical Engineering degree from
University of Ilorin, Nigeria.

ART & SCIENCE 28

 VALUE When companies invest in large transformations, theyre doing so to return value to the company and to customers. But several years down the road, its easy to lose
sight of these original motivations. Value Diagrams are a great way to stay on track. They provide a clear line of sight from a companys myriad change initiatives to the
DIAGRAM specific levers that drive company and customer value.

VALUE FOR CUSTOMER VALUE FOR COMPANY

CUSTOMER CUSTOMER COMPANY COMPANY

CHANGE
VALUE OPERATIONAL OPERATIONAL VALUE
INITIATIVE
LEVERS LEVERS LEVERS LEVERS

Improve Acquire New

Buying Project A
Markets
Experience

Reduce
[Illustrative] Transaction Project B
Cost

Improve User Develop

Experience Project C New Offerings

Reduce
Project D
Operating Cost
Reduce
Cost of Doing Increase
Business Revenue
Increase Optimize
Project E
Self-Service Portfolio

Customer Increase
Transparency
Project F Free
Value Index Improve
Customer
Reduce
Product Cost Cash Flow
Service
Willingness to Pay Increase
Reduce Product
Shareholder Value
Contracting Project G
Options Complexity

Increase
Set Up Project H
Options

Reduce Cycle Improve

Time for Dispute Project I Sourcing
Increase Resolution Increase Asset
Revenue for
Productivity
Customers

Enable
Faster Project J Implement Lean
Time-to-Market Operations

Reduce
Project K Rework

ART & SCIENCE 29

by Frank Samuels & Inder Dua

GUNFIGHT
AT THE O.K. CORRAL
The Changing Consumer
Payments Landscape

T
here was a time, long ago, when the
relationship between a merchant and his
customer was simple and direct. The customer
purchased goods in cash or on a personal account at
the store, and the merchant got to keep all of what he
was paid.

Then the rise of the credit industry ushered in an era

of unprecedented convenience for customers and
retailers alike. But convenience, like everything else,
comes at a price. And much of that price is being paid
today by retailers.

30 ART & SCIENCE

 Gunfight at the O.K. Corral

Just follow the complex value chain in a And electronic payments versus paying
typical credit or debit transaction, and you by cash or check are only going to
can see how many parties have a piece of increase in popularity. In just the last
the action and how big their stake is: decade alone, theyve gone from less than a
third of total transactions (in dollar value)
First, a consumer goes to a retailer like to almost two-thirds.
Target, and uses a credit or debit card to
buy $100 worth of stuff; Its no wonder retailers are itching to
do something about the current value
The Merchant Acquirer, a bounty chain (and questioning just how much
hunter who signs up retailers to use actual value each
Visa or MasterCard, gets a CONSU
member
brings to
MER m
$0.40 cut; purch
ase
akes
$100+
the table).
MERCH
Then the Payment Network Owner A bo
signs
ANT A
unty
CQUIR
hunte
ER And now
-0.40
(Visa or MasterCard) takes a cut of is the time
r th
use V up retail at
isa o e
r Mas rs to
to act. Over
terCa
about $0.15; PAYME
rd

Visa,
NT NE
Maste
TWORK
O WNER
the next
rCard -0.15
The Transaction Processor, several years,
TRANS
who handles all the back-end Back-
e
ACTIO
N PRO
CESSO a combination
trans nd proces R -0.
underworkings of the purchase, actio
n
sing
o f
15
of external
then comes in and takes his ISSUE
R BAN
trends and new
K
$0.15 cut; and players on the
Manag
e
relat the cust - 1 .
ionsh omer 60=
ip
scene promise to
Finally, the Issuer Bank, who
MERCH
ANT f
inal completely upend
manages the relationship
$97.7
0*
the status quo.
with the customer, gets the
biggest cut, at $1.60. The coming battle
should be epic,
So of that original $100, the merchant reminiscent of the
gets to keep $97.70. Gunfight at the O.K. Corral only
with less violence and more chaos. The
Thats the system as it has stood pretty first round of the shootout is already
much since the dawn of the credit era. underway, and retailers stand to gain not
While a mere $2.30 of every $100 may only a bigger piece of the action, but a
not seem like a huge price to pay, consider closer, richer relationship with
this: electronic payments (debit, credit, etc.) the consumer.
by consumers totaled almost $6 trillion last
year. Of that, merchants paid almost $136 Lets review the cast of characters and their
billion to these other parties. stake in the fight, examine the big solution
that everyones aiming for, and look at
THE WILD, WILD WEST how the various plans and schemes may
Up until recently, the merchant has had very shake out.
little bargaining power in this arrangement.
But imagine shaving just 10 cents off that KEY PLAYERS SHAPING
$2.30: thats almost $6 billion. How about 50 THE BATTLE
cents? Now were talking about real money The status quo is clearly under attack,
almost $30 billion. and its coming from all sides. Here are

ART & SCIENCE 31

by Frank Samuels & Inder Dua

a few of the players and whats driving advantage of feature-rich phones with
their actions. special payment apps offers the wireless
carriers an attractive foothold into the
SMARTPHONE-WIELDING payments industry.
CONSUMERS HAVE MORE POWER
AND CONTROL THAN EVER FRINGE PLAYERS ARE LOOKING TO
Todays smartphones can originate and JOIN THE BATTLE
consummate transactions as well as store, Companies like Google that now have a
manage, and exchange information in small piece of the consumer payments
a secure manner. This gives consumers industry are exploring ways to expand
the power to conduct more and more their footprint, either by integrating with
electronic transactions from any place at existing players or bringing in new ones.
any time. Handsets could ultimately replace Google Checkout is now expanding from
the physical wallet as the major receptacle online to actual in-store payments
for all manner of cards debit, credit, through the introduction of a new
prepaid, loyalty, rewards and even ticketing. smartphone. Theyre exploring other
Consumers could also use capabilities, like mobile banking,
them to take advantage of It is clear that an advertising and identity
digital merchant offers management.
alternative payment
(e.g. coupons
and other transaction- platform based on a mobile GOVERNMENT
based rewards). network is the ultimate REGULATORS
industry direction ARE CRACKING
MARKETERS ARE DOWN
HONING THEIR TACTICS Recent legislative and regulatory changes,
Advertisers are moving away from static, from the 2009 Card Act to the creation
mass media blitzes and paper coupons to of a new consumer advocacy agency,
focus on a clearer return on investment promise to restrict the credit card
with lower risk by targeting individual industrys marketing and interest rate
consumers, in real time, and with ever practices and impact profitability (to
more precision. Combining smartphones, the tune of $50 billion over the next
the ability to determine the location of five years in the case of the Card Act).
the consumer, and digital coupons gets Its likely that issuers will find a way to
marketers closer to the Promised Land: recoup some, if not all, of the losses
more certain return on their investments from the merchants, or from consumers
and prompt feedback through real-time through modified card agreements.
coupons and rapid redemption.
This brings us back full circle. As the
WIRELESS CARRIERS ARE various players battle it out, retailers will
AGGRESSIVELY SEEKING NEW want to pay close attention in order to
REVENUE STREAMS protect their interests, minimize total
The telecom industry has this huge payments to each party, and gain more
fixed asset base the mobile networks control over the battlefield.
they painstakingly built and theyre
looking to squeeze every last dollar out THE SHAPE OF THINGS TO
of them. Strong competition from the COME
likes of Skype and Google Voice has only Based on the early moves of these key
increased the urgency to do so. Taking players, it is clear that an alternative

32 ART & SCIENCE


payment platform based on a
mobile network is the ultimate
industry direction. [See sidebar:
A Mobile Payment Network
Primer.]
The goal of such a network will
be to unbundle the traditional
payment value chain, redesign
the value equation, and then
selectively reconfigure it
to capture in some distinct
advantages for whoever gets
there first.
Success will require scale and
some strategic partnerships.
Each player or group of players
seeking to set up a mobile
payments network will likely
still partner with or leverage
most of todays incumbents
(merchant acquirer, payment
network owner, etc.) but may
also attract new participants
like mobile network operators,
to help provide the last mile
connection.
How these partnerships are
structured and who takes on the
leadership role will go a long way
in defining who comes out on
top and how long they stay there.
HOW WILL THIS
MOVIE END?
As the consumer payments
industry transformation unfolds,
Gunfight at the O.K. Corral
A Mobile Payment
Network Primer
A mobile payment network facilitates financial
transactions over a wireless network through
applications and information residing on the
mobile handset. By storing a consumers
existing credit, debit or pre-paid card
information within the phone and employing
near-field communication (NFC) technology,
the mobile phone can be waved near a
contactless point-of-sale (POS) terminal to
complete transactions.
A Mobile Wallet as a key part of the overall
solution provides consumers with the interface
to choose a preferred payment method (debit,
credit, prepaid, etc.). Turning a mobile phone
into a mobile wallet involves adding four
elements to the device:
NFC Chip, which enables mobile devices
to send account information to contactless
payment readers at customer checkouts
and other point-of-sale systems;
A Secure Element, which is used for storing
and accessing applications and financial
data in a secure manner;
A Wallet Application, which allows a user
to manage payment accounts, initiate
contactless payments, and, through an
interface, take advantage of additional
services such as advertising, mobile loyalty
and ticketing; and
Personalized Account Information, which
is applied at the point of sale to validate the
identity of the customer.
Mobile payment networks are not an entirely
new concept and have been rolled out in some
other countries. Japan boasts the largest
deployment of contactless mobile phones
used for making payments in the world by far,
a rollout that began six years ago. More than
60 million phones carrying the NFC-like FeliCa
chip from Japans Sony Corp. are in circulation.
These phones are used for a wide range of
services like transit ticketing, airline check-in,
and building access, to name a few.
There is evidence of strong consumer interest
in the US and various financial institutions are
cautiously evaluating their options while trying
to understand the economic benefits and
challenges it could bring them.
ART & SCIENCE 33
by Frank Samuels & Inder Dua
we see at least five potential scenarios.
At the moment, the first two appear to
hold the most near-term potential, as the
battle is already engaged. But things are
changing rapidly and anything can happen.
Lets look at each scenario and
assess whos leading the charge,
what theyre fighting for and the
potential outcomes:
SCENARIO 1:
WIRELESS
OPERATORS RULE
As their core business becomes more
competitive, wireless carriers are looking to
leverage their existing mobile networks and
subscriber relationships to create additional
revenue. They see an opportunity to
provide more profitable value-added
services, like payments and advertising,
which will drive increased data usage.
Three of the four major wireless
providers AT&T, T-Mobile and Verizon
have announced a new joint venture
called Isis, and its early proof that a
nationwide mobile payments network is
already becoming a reality.
Working in concert with Discover and
Barclaycard, the idea is to enlist key
partners from each segment of the largely
physical consumer payments value chain
and then configure a mobile payment
network brand to compete with the likes
of Visa and MasterCard.
While Isis plans to run an open mobile
payments platform, we expect that this
joint venture will elicit some strong
competitive reactions. Right now, Isis may
have drawn first blood.
As the competition further stiffens,
look for all the wireless carriers to try
using their existing mobile networks and
subscriber relationships to wedge their
way into services like mobile payments
and advertising
34 ART & SCIENCE
SCENARIO 2:
ATTACK OF THE GOOGLES
Technology players see an opportunity to
add new revenue streams by encroaching
on the payments value chain and building
out new business models like mobile
coupon transaction processing.
Google has launched
a smartphone, the
Nexus S, and acquired a
company called Zetawire,
to take full advantage of near-field
communication (NFC) technology, which
allows consumers to wirelessly retrieve
information from items they want to
purchase or simply get more information
about the item from publicly available
sources.
Google also plans to provide the software
necessary to process payments for all
payment networks and issuers. The
company aims to earn revenues from
processing fees, mobile coupon transaction
processing, and other value-added services.
Google is also exploring the
complexities of location and context in
delivering filtered information and will
undoubtedly leverage the phone and the
Android operating system to strengthen
their current position in the mobile
marketing space.
Look for other technology players to
emerge as well, like Square, a 2011
market entrant that enables anyone to
accept credit card payments anywhere,
using a small device connected to the
audio jack of an iPhone or iPad.
SCENARIO 3:
REVENGE OF THE MERCHANTS
Merchants see an opportunity to reduce
current interchange fees and to also
provide targeted marketing and
 Gunfight at the O.K. Corral

promotions to consumers in real time, MasterCard (MasterCard Mobile Money

resulting in increased foot traffic and sales.
As early as 2008, cafeteria operator Sodexo
partnered with transaction processor First
Data and MasterCard on a successful
trial of a stored value card. BART, the
public transit system in San Francisco,
also partnered with Jack in the Box, Sprint,
and First Data on a local trial that
included payments as well as retrieval
of coupons from a Radio Frequency
Identification-enabled (RFID) poster.
Send) and Visa (GO-Tag) have already
ventured into this space with some
success, with the support of issuers like
Bank of America, Wells Fargo and HSBC
Bank. Visa has introduced a product
that can transform most smartphones,
including Apples iPhone, into a
payment device that can store multiple
card accounts in an e-wallet.
The network owners may be a sleeping
giant, but they can surely hear the gunfight.

A merchant like Walmart could also look SCENARIO 5:

to partner with issuers, mobile networks
and payment processors on a mobile
payment network built around its front
and backend systems.
Merchants dont necessarily have to
jump on the bandwagon immediately,
but exploring options is a good idea.
They all want to reduce the interchange
fees they pay and
better target their Merchants stand to recapture per $100 transaction
customers with a share of the value that is lost
promotions in
under the existing model.
real time.
SCENARIO 4:
THE OLD GUARD FIGHTS BACK
Facing pressure, the incumbent network
owners might seek to inoculate their core
payments business from erosion and
hedge their bets by participating in the
evolving mobile payments space.
Under this scenario, MasterCard or Visa
could partner with one of the wireless
carriers to build a mobile payment
platform. They would essentially take
over the role of the mobile payment
network operator and potentially
extend their partnerships with issuers,
merchants and payment processors.
ISSUER BANKS SPREAD THEIR
WINGS
Banks may see an opportunity to poach
new customers via mobile network users
and provide the next generation of
services. More expediently, they may try
to extend their current role to include
processing payment transactions, earning
some of the 30 cents
themselves.
An issuer bank or a
consortium of banks
could conceivably band together with a
technology provider like Apple to build
out an independent, standalone and
open mobile payment network.
Some have already dipped a toe in the
water. Bank of America recently began
testing technology to turn smartphones
into payment devices, while JP Morgan
Chase and Wells Fargo are developing their
own pilot programs, according to Visa.
Additionally, U.S. Bancorp will begin testing
similar technology in multiple states and
plans to offer it to select customers in 2011.
The issuers may be behind, but with a
$1.60 share of every $100 transaction, they
clearly have the biggest stake in this fight.

ART & SCIENCE 35

by Frank Samuels & Inder Dua
THE AFTERMATH
These five scenarios are all real
possibilities over the next three years. We
anticipate that competitive responses to
the first
two scenarios, already in play, will spawn
the next three (or some blend thereof).
Success or failure will rest on at least
three factors:
Who plays the lead role an incumbent
or a new entrant;
Whothey partner with to fill the
other roles incumbents and/or new
entrants; and
Whatcapabilities they choose to build
as key differentiators.
Looking beyond three years, its anyones
guess what the consumer payment
industry landscape will look like.
One thing is clear, though: it will look
nothing like the current state.
36 ART & SCIENCE
For now, retailers will want to keep
a close eye on the battle taking place
in the first two scenarios. Whether or not
merchants choose to join the fray, they
would do well to ensure they have enough
flexibility in their corporate structure to
address opportunities that arise.
Regardless of which scenario prevails,
its clear that merchants will no longer
have to settle for the status quo. At a
minimum, they stand to recapture a
share of the value that is lost under the
existing model. Recovering about 30
cents from the cost equation is realistic,
and that amounts to almost $20 billion in
cost savings for them annually.
Beyond that, merchants could gain
immeasurable value through a closer,
more robust relationship with their
customers, while boosting sales volume
through new services.
With David Haffty and Benjamin Hoster
contributing
 Gunfight at the O.K. Corral

About FRANK SAMUELS

Frank is a Partner in the Information Transformation practice of Infosys

Limited. He is also a certified Financial Engineer who enjoys financial modeling
and securities pricing.

Frank has had the privilege of three professional careers ranging from structural
engineering to corporate mergers and acquisitions to (over the past 13 years)
strategic management consulting. His primary focus is on helping clients capture
value from complex business transformations.
Frank_Samuels@infosys.com
Frank is an incurable learner and is very passionate about helping others
through volunteer activities. He holds a Bachelors degree in Structural
Engineering, a Masters in Finance, and an MBA from MIT Sloan with a
focus on Financial Engineering.

About INDER DUA

Inder is a Principal in the Communications, Media and Entertainment

practice of Infosys Limited with 11 years experience in consulting,
manufacturing and media & entertainment industries. He specializes in
digital asset management, marketing operations and eFulfillment.

Inder has an international MBA from HEC France and a degree in Process
Control Engineering. He was one of the 3 finalists for a global social venture
business plan competition (for Organic Groundnuts), and he actively supports
causes of eye donation and welfare for handicapped kids in India. He is a
Inder_Dua@infosys.com
strong believer in Karma Yoga and enjoys reading the Bhagwad Gita.

ART & SCIENCE 37

by Prateek Sinha & Sally Stuart

THE HOUSEWIFE *, THE SALES

FORCE & THE COMPANY
A Collision Course in Aisle 9

T
he show Mad Men has richly revived the portrait
of the iconic 50s housewife, who made choices
for her family by reading ads in newspapers
and taking advantage of Wednesdays deals. As we all
know, that consumer is gone. In her place is someone
increasingly technically savvy, connected, perhaps more
frugal, and certainly more pressed for time.

Carrying a mobile device, todays consumer strides

purposefully through supermarket aisles, scanning bar
codes to compare prices in real time, reading food
labels, browsing Coupons.com, and making buying
decisions based on digital ways of looking at the world.
She works in real time, and so must her suppliers. This
consumer requires just-in-time information and prod-
uct availability. She wont accept were getting more of
those next week, or we dont carry that.
*
Apologies to the househusbands; we tried to go with something
gender-neutral, but housespouse didnt really roll off the tongue.

38 ART & SCIENCE

 The Housewife, the Sales Force & the Company
Large retailers like Walmart, who deal
directly with the new consumer, have
known this for a long time, and have been
pioneers in just-in-time inventory manage-
ment. Unfortunately, the consumer pack-
aged goods (CPG) companies of the world
are up against an ongoing problem: how to
manage a large, distributed field sales force
against the demands of a big box retailer, a
small mom and pop, and the demands of
the consumer in the aisle.
DIGITAL VALUE CHAIN
This new complex world dictates
Business Units
the need for a digital value
chain a near real-time Account
Team
feedback loop that con-
nects the consumers
wishes with the inventory
and supply systems of
the retailer, all the way
back to the CPG company Sales Force
and its business, marketing
and R&D departments. Also
somewhere within that loop is the
sales rep for the CPG company, who has a
longstanding personal relation-ship with the
retail store manager.
And this is where the breakdown in the
digital value chain nearly always occurs.
Because the sales rep is out on the floor,
pushing product, placing displays, handling
in-store signage and overseeing in-store
trade promotions, youd expect theyd have
access to all sorts of market information.
Youd also expect that information would be direct-to-store supply chain variations,
digested, analyzed and transmitted back to
corporate, to help drive better decisions.
But this kind of analysis and data transfer
on an enterprise level requires technology.
And most sales reps use spreadsheets and
manual lists to manage promotions, prod-
ucts, stores and inventory.
Even when enterprise tools are provided,
the sales rep often does his own shadow
accounting on the more familiar spread-
sheets. He believes his real value is in the
relationship, and its hard to blame him:
he has no real line-of-sight from the local
mom and pop or mega-store in his ter-
ritory to his companys P&L. On top of
that, he is given competing priorities, so he
has to use intuition and work-arounds to
decide what needs to be done where, and
by when.
The most progressive consumer products
companies have begun to address this
breakdown with mobile,
CPG web-based collaboration tools.
They are finding that, al-
though difficult to imple-
ment, web-based col-
laboration among all
the many players the
Retail Store
company business unit,
Consumer
the brand manager, the
sales force, and the retail
stores can deliver ben-
Supply Chain efits to the tune of hundreds
of millions in incremental
revenue and margins for all involved.
THE CHALLENGE
But theres a reason CPG manufacturers
have been slow to embrace technology to
enable their sales reps. And just as it was
with the rep who wields a spreadsheet
to manage inventory, its hard to blame
the CPG companies: they have 100+
products across 30,000 stores in 100
different regions. Add in all the product
authorization required for warehouse and
as well as managing a 1,000+ field sales
organization, and P&L management by
the business units at headquarters, and you
can begin to visualize the complexity of a
systemic organizational change.
So, yes, these transformations do not hap-
pen overnight. But they have to happen.
No packaged goods company can afford
to have a sales force that is underleveraged
and ineffective.
ART & SCIENCE 39
by Prateek Sinha & Sally Stuart
THE TECHNOLOGY SOLUTION:
STEP BY STEP
To deploy a truly useful collaborative
platform, companies must get information
to flow seamlessly among the retailers
business teams, the sales reps for the
consumer packaged goods company,
the packaged goods companys brand
managers, and its business units. There are
a few critical steps that must happen first.
THE FIRST STEP: DESIGN IT FROM A
SALES REPS POINT OF VIEW
Any change in a sales persons life will only
be adopted if its either his idea, or you
make him believe its to his financial benefit.
The introduction of a new gadget might
be received with initial enthusiasm, but it
could soon give way to my sales are down
because you made me use this
thing...
The only way to avoid this fate is
LE
to secure buy-in and ownership
SA
for a transformation from the
sales leaders and all-star
sellers.
Next, you want to think about what the
sales person needs. When you design the
platform, you want the ability to segment
stores, align the reps time with the high
investment locations, and prioritize the ac-
tivities a rep does in a store so the highest
revenue producers are done first.
To kick this off, the companys business
units should determine the revenue and
margin a particular activity could have
based on historical and Nielsen data,
allocate how much time each sales rep
should spend in each store based on their
volume, and create custom retail activity
plans for stores based on the allocated
time.
Your platform should also bridge the exist-
40 ART & SCIENCE
ing communication gap between the ac-
count team and the sales team, so they can
collaborate and discuss execution plans.
Using this platform, account teams should
be able to send activities tailored to each
sales rep, and direct them to perform the
highest ROI activities first, while ensuring
that the reps are not under or over allocated
activities for a particular store.
The retail execution platform, however, is
only as good as the performance across
the packaged goods company as a whole,
leveraging feed-back from the sales reps to
plan for the next week, and communicating
the feedback across the sales organization.
Reporting also enables the CPG company
to measure the effectiveness of its reps and
identify training or coaching opportunities
to improve in-store execution.
NEXT UP: THE HARDWARE
A big part of the solution design will
be arming the sales reps with tablets
or smart phones that are easy to use in
the field and cool to carry.
Sales people are notorious late adopters,
and for them to get into a technology, it
must be mobile, immediately useful, and
non-threatening to their personal relation-
ships. Choose a tablet or mobile device they
can learn quickly and will be proud to carry.
FINALLY, THE ACTUAL
APPLICATIONS
Quite simply, if the applications are simple
and easy to use like apps on a smart
phone, rather than ERP systems the reps
are going to be more likely to adopt them.
Also, any software should provide data
and feedback to help the sales rep make a
case to a store manager for repositioning
a product or putting an item on display.
With a few clicks, he should be able to see
and show the store manager the result:
This will give you a 50% lift in traffic
and an incremental $200,000 during the
 The Housewife, the Sales Force & the Company

promotion period itself. The software
should help the sales rep do his job bet-
ter, get higher incentive pay, and empow-
er him with mobile insight.
At the same time, the software should
empower the account team as well,
helping them prepare presentations for
various store chains, and helping them
monitor sales force activity or promo-
tions success.
SUMMARY
Consumer packaged goods companies can
increase incremental revenue by becoming
more effective in planning and executing
retail activities including trade promotions.
Every promotion generates a lift for both
the company and the retailer, although not
all retail stores drive equal revenue. So sales
reps have to be given information that will
encourage them to plan retail execution
more effectively to focus their time on the
stores that generate the most revenue, and
to spend time in the stores most effectively.
While we know that salespeople feel their
personal relationships are always more im-
portant than technology, and often distrust
software designed by corporate, there
is reason to believe that corporate can get
smarter, and that the current handhelds,
smart phones and tablets are finally getting
so easy to use, even adults can use them.
At the very least, when the salesman collides
with that modern consumer in the aisle, his
technology should be worthy of hers.

About PRATEEK SINHA

Prateek is a Senior Principal in the Retail, Consumer Goods and Logistics

practice of Infosys Limited.

He has 15 years of CPG, Retail and consulting experience. During this

time, he has launched a coffee brand, managed a beverages business and led
transformations for various global organaizations.

Prateek has an MBA and a Bachelors degree in Computer Science &

Engineering.
Prateek_Sinha@infosys.com

About SALLY STUART

Sally is an Associate in the Retail, Consumer Goods and Logistics practice

of Infosys Limited. She is an expert in Sales Force Automation, Marketing
Resource Management, and Promotion Planning and Optimization.

Sally has a BA in Economics from the College of Arts & Sciences at

Cornell University.

Sara_Stuart@infosys.com

ART & SCIENCE 41

by Sharad Elhence & Saurabh Agrawal

METRICS WHAC-A-MOLE
What Most Companies Get Wrong,
and How to Get Metrics Right

I
f youve been around corporate metrics programs,
youve probably heard the horror stories. The
fast food chain whose employees started making
every chicken sandwich to order because management
began measuring the amount of waste. Sounds good,
but order time and wait time went up exponentially,
and customer satisfaction scores dropped precipitously.
Or the more common: the customer service rep who
dumps callers abruptly after helping them in order to
meet call volume targets.

Its Corporate Whac-a-Mole. Solve one problem, and

another pops up.

And thats the dirty little secret: most metrics programs

have become meaningless exercises in paper shuffling
that either dont deliver the desired results or, even
worse, deliver unintended bad results in another area.

42 ART & SCIENCE


Why are metrics so hard to get right?
Your car has a metric, and it encourages
exactly the behavior it should. When
the gas gauge alerts you that you are
low on fuel, 99% of people (save the
teenage population) will find the next
gas station and refuel. Or, theyll watch
this important metric and refuel before
it signals an immediate need.
So what can we learn from the fuel
tank metric? When a metric measures
something simple, does it clearly, and is
very closely tied with a negative outcome,
it will have a clear effect on behavior.
A corporate metrics program should
do the same: alert your
Solve one
managers to issues, so they
can be fixed before they problem,
become problems. pops up.
HOW METRICS GO
WRONG
There are several reasons metrics programs
dont achieve their desired results, and chief
among them is the guy in the mirror. Its
basic human nature. When managers set
their own departmental metrics, they are likely Making sure everything that is measured
to set the hurdle at a height they
know they can clear. Beyond this natural
fear of accountability which is not to
be underestimated there are several
supporting reasons metrics often go awry:
theyre too complex, they cant be attributed
to one group, or they just dont measure the
right thing. Lets pick these apart.
TOO SMART FOR OUR OWN GOOD
Most metrics are owned by the CFO
or the COO, who is setting the agenda
based on what he or she is rewarded
on, so the entire company dashboard
becomes financial in nature. Managers
will say they measure Return on Invested
Capital (ROIC) or Net Present Value
(NPV), but they have no idea how their
day to day activities impact those metrics.
ROIC and NPV are ethereal numbers,
culled from complicated calculations and
Metrics Whac-a-Mole
multiple spreadsheets, in a fire-drill of a
quarterly process with an end result that
means nothing to anybody but the CFO.
Take, for example, the industrial
conglomerate that measured its financial
success with a complex metric called
See-FROG-See [CFRoGC] Cash
Flow Return on Gross Capital. That
metric, the result of intense efforts to
account for risk adjustments and cross-
currency aggregations, was impossible for
employees to understand and couldnt guide
decisions or actions.
Better to break these complicated metrics
down to their component parts the
exact balance sheet or income
and another statement line item they
correspond to (Revenue,
COGS, SG&A, Working
Capital, Fixed Capital
Efficiency, or Effective Tax Rate). Then,
hunt down the specific processes that drive
those numbers, and measure these, because
they are your value levers.
links to higher level operational and
financials metrics owned by the executive
is the key to having the right information
to drive decisions.
The best financial metrics accurately
track progress toward specific goals, so
wise goal-setting is key. Review last years
actual performance, then set goals for
income, cost of goods, gross margin,
operating expenses, and net profit.
Set goals grounded in the reality of past
performance, making sure your monthly
financial statements are accurately adjusted
for work in process, and summarizing your
statements in a
budget tracking report.
THEY JUST DONT MEASURE
THE RIGHT THING
Which brings us to another point.
ART & SCIENCE 43
by Sharad Elhence & Saurabh Agrawal
A lot of companies use metrics to measure
financials. But if your metrics program
doesnt have operational or business
process metrics in addition to financial
ones, its hard to tell how the business is
doing.
Suppose you have a complex operational
metric, like Customer Satisfaction Index,
which has multiple embedded nuances
like churn or repeat purchases in it. You
must be able to find out what actually
causes your customers to be satisfied.
Is it on-time delivery (OTD)? Or is it
delivery against customers
expectations? The two can
be very different.
If you tell a customer
youll be there
between 12 and 4, and
you arrive at 4, that may
feel like 100% OTD to the
company, but it certainly doesnt
feel that way to the customer, who
blocked off that four-hour slot, and has
already tweeted four times how angry she
is. From her point of view, she blocked
off 12-4 for your visit; now she has to
stay an extra hour or more while the
actual repair work is done.
OWNERSHIP: THEY CANT BE
ATTRIBUTED TO ONE GROUP
A frequent complaint we hear from
managers when it comes to metrics is
that they are so inconsistent: One cycle
inventory is too high, the next cycle we
have significant stock-outsI cant drive
processes to an optimal outcome.
A metric is an absolute measure. But no
one action in an enterprise is isolated
from all other actions. A single isolated
metric can lead to some very
undesirable outcomes.
For example, a recent client was
witnessing wild swings in inventory as
44 ART & SCIENCE
a result of periodic overcorrections.
One month, manufacturing was told
they were being measured on productivity,
so they expanded batch sizes and
produced at record levels. Of course that
created a very high level of inventory,
which sales couldnt offload, so they were
given short-term incentives to dump
excesses into the discount channels in
order to save working capital from being
adversely affected that quarter. They were
in a massive cycle of overcorrection
between sales and manufacturing.
How did they resolve the
problem?
They agreed that
Manufacturing and
Sales would jointly
own an Inventory
metric. Manufacturing
would still measure
productivity and sales
would still measure its teams
performance, but the two would have
to collaborate in the Sales & Operations
Planning process to get inventory levels
just right.
Like quantum physics, all processes in an
enterprise are interconnected, and so are
the metrics. There is no individual metric
that can really be controlled by a single
manager. So causal linkages in a metrics
hierarchy should be well understood.
Otherwise, one individuals actions
or operational decisions may have an
undesirable impact on another area of the
same process.
HOW TO DO IT RIGHT.
On the opposing page, we offer a simple
diagram for selecting the right metrics,
ensuring ownership, and making sure
they encourage the right behaviors.
THE FRAMEWORK
Any measurement strategy must address
what it is measuring (process inputs and
 Metrics Whac-a-Mole

How do we align the metrics hierarchy

with the organizational hierarchy, and
drive the right accountability?

What to Who to
Measure Measure
Process Inputs Process
and Outputs Owners
Align to
Strategy

How to
What data is required Measure What dashboards and
and where should Technology reports do we need? How
it be captured? do we automate delivery?

outputs), who it is measuring (process airline wants to cut costs, so it measures

owners and participants that can impact
the outcome) and how it is being
measured (through appropriate use of
information and technology).
Today, in many organizations, metrics
reporting is considered a chore. This
framework recommends automating the
delivery of metrics elevating it to the
status of a critical business capability.
Using technology to enable stable and
reliable data acquisition is the last (but a
fundamental) piece of the metrics puzzle.
Ultimately, alignment with strategy
implies a strict prioritization measure
what is important and what directly
impacts strategic objectives not more,
not less. Lets go clockwise around
the diagram.
fuel used, and pilots adjust their behavior
by flying more slowly and leaving the
air conditioning off. This drives on-
time arrivals down and causes customer
satisfaction scores to plummet. If all the
customers begin flying another airline,
lower fuel costs wont matter.
A better approach is to start with the
key business objectives. Then identify
the processes that drive those objectives.
Youll want to also note the customers
of each process, and what their interests
are before you move on to selecting
metrics. So the airline above would have
realized that a metric on fuel usage might
impact customer experience or on-time
arrivals, and would instead have found
where fuel is wasted, and set a metric
around that.

WHAT TO MEASURE Select metrics that measure the behaviors

SELECT THE RIGHT METRICS
The biggest mistake companies make is
that they start with a metric they want to
measure rather than a business objective.
A classic example is the one where an
you want to change or monitor. Always
ensure that the trade-offs implicated and
the associated metrics hierarchy are aligned.
A key approach to selecting the right
metrics is to ensure that you are measuring

ART & SCIENCE 45

by Sharad Elhence & Saurabh Agrawal
the critical customer requirements/
outcomes from the process in question.
Keep the metrics program simple with
few metrics to drive focus. A good rule
of thumb is to monitor a minimum of
three and a maximum of five metrics on
a dashboard. You could have additional
metrics that are relevant in special cases,
but three to five metrics are adequate
to help you track the steady state
performance of a process or operation.
In fact, every business has one
magic metric that holds
the key to its performance.
It may be sales revenue per
transaction, returns, page
views, or percentage of
growth, but chances
are, the CEO
and Board
unconsciously
know what it is.
Select metrics that ultimately measure
value to the shareholders and customers.
How does the metric you own roll up
through the organization to produce
shareholder value, and how can you
influence it? Once you understand that
relationship, you can drive behavior
correctly.
Select metrics that not only provide a
historical view of performance but also
include leading indicators. A historical
view and context of the metric is critical
to understanding what the metric is
telling us, and therefore what action to
take. Intuitively, you would know that
holding too much inventory is bad. But
a historical view would allow a team to
determine how much is too much, and
whether the inventory level is in fact
rising with time.
Be open to evolving and refining the
metrics from one period to the next
in line with changing priorities and
46 ART & SCIENCE
capabilities of the organization. Metrics
should change to accommodate your
teams changing focus or your companys
shift in strategic priorities.
Of course, you dont want wild swings
in what you measure, or youll never
have a baseline or something to compare
progress against. But you need to make
sure each metric is not encouraging a
similar trade-off in behavior somewhere
else.
WHO TO MEASURE
ENSURE
OWNERSHIP
Select metrics
that align the
organization
with strategic
priorities by
linking CXO metrics with those of
CXO-1 level, and -1 level metrics with
-2 level, and so on for the rest of the
organization. Conversely, think about
your own performance metrics. If they
do not directly enable your supervisors
metrics, then you may not be completely
aligned with the organization.
Ensure ownership and accountability
for each metric. If a metric has no clear
owner, consider taking it out of the
program. Why measure something if no
one is responsible for changing it?
HOW TO MEASURE
PROVIDE VISIBILITY
Dont try to measure anything for which
you dont have accurate and timely data
available. If you cannot support a metrics
program with the right technology, it will
eventually fail. So start by measuring what
you can, and evolve from there.
Once you begin assigning metrics to
individuals or departments, make sure the
metric owners have continuous visibility
 Metrics Whac-a-Mole

to data so they can adjust levers and To make a metrics program successful, it
behaviors to drive performance. Having must avoid the common pitfalls and: a)
a scorecard of performance as a visible measure the right performance given the
reminder of pending action is a significant company strategy, b) allow for the right
motivator. Visible success is an even ownership, and c) be systematic
stronger motivator. Once an individual, and consistent.
team or the whole organization can visibly
see improvement in metrics towards theSo while metrics are absolutely critical,
desired target, they will be motivated to
relying solely on them to understand
sustain the momentum. whats happening in a business is a sure-
fire path to failure. A little qualitative
CONCLUSION analysis and anecdotes can be quite
Be careful what you measure, because telling and should complement any
you may get more of it than you want. metrics program. Most importantly,
While this is an often quoted clich, get engaged; youll see if a process is
it is true without exception. achieving the desired outcome, and if
not, why.

About SHARAD ELHENCE

Sharad Elhence is a Partner in the Strategy practice of Infosys

Limited and works with F500 clients in the Manufacturing,
Retail, and Distribution industries. He specializes in addressing the strategy,
process, and technology issues that might be impeding business performance. He
is also the global leader for Infosys Value Realization MethodTM.

Over the last 23 years, Sharad has served many clients. He got his start at
American Airlines, was trained in consulting at McKinsey, and then worked
for supply chain software company i2 Technologies. He holds a Bachelors degree
Sharad_Elhence@infosys.com
in Mechanical Engineering from the Indian Institute of Technology in Delhi, a
Masters in Industrial Engineering from SUNY Buffalo, and an MBA from Wharton.

About SAURABH AGRAWAL

Saurabh is a Senior Principal in the Strategy practice of Infosys Limited.

His career has spanned 5 different countries, and included stints in sales,
product operations and consulting. At Infosys, Saurabh has developed deep
expertise in Supply Chain and Infosys Value Realization MethodTM. He is
one of the co-inventors of the Value Diagram.

Saurabh has an MBA and a degree in Mechanical Engineering.

Saurabh_Agrawal06@infosys.com

ART & SCIENCE 47

by Akash Bhatia

SOCIAL BUSINESS
The Rise of Unstructured Data

F
rank Eliason, a lone customer service manager
for Comcast, was sitting in his living room fielding
customer service calls on his headset, when he
saw an article about a new status messaging service. He
thought it might be another way to reach the customers
who called him daily with service problems.
So Frank logged into the service, registered under the
handle @comcastcares, and began to make history.

Frank turned Comcasts image around almost overnight

by monitoring Twitter behind the handle @comcast-
cares, and responding to complaints on a timely, person-
al basis. Although it was labor intensive for Frank, Twitter
users were vocal about his quick response to
their issues, and they sang the praises of Comcast.

48 ART & SCIENCE

 Social Business

But even more than being a new vehicle From the structured data, we can learn
to reach and serve customers, Twitter data that 2010 Model X is a car model,
taught Comcast what kinds of problems Navigation System is a component, and
its customers were having, so it could defective is a condition: we can define
tweak its products and eliminate the prob- the relationships between those three
lems. It also made Frank into something fields so we know that the navigation
of a social media star. system in a particular 2010 Model X is
defective.
Frank was a pioneer in a new form of
business social business wherein cus- UNSTRUCTURED DATA IS
tomers expect to talk to brands, and expect DIFFERENT
to be answered, often in near-real time. He Unstructured data, on the other hand, is not
got information about Comcast customers stored in a relational database, or at least
that was not available before social media. not one in which the data model is relevant
to the meaning of the data. For example,
Now imagine if you could get that kind of someone posts to an automotive forum on
insight into your prospects, your custom- the internet:
ers, your competitors, your products and
what customers like and dislike about your The GPS in my 2010 Model X is constantly
product without all that People today are getting me lost!
manual monitoring. People leaving a vast digital It stops receiving any signal for
today are leaving a vast minutes at a time, and when it
data trail on social media
digital data trail on social finally decides to tell me where I
media sites, in customer sites, in customer call am, half the time its wrong. Of
call center issues logs, and center issues logs, or in course it worked perfectly when I
in emails. was at the dealer for my last oil
phone calls, but most
change. How do I demonstrate
But most companies dont companies dont tap this the problem for them
know how to tap this data unstructured data and so that they can fix it?
and use it to improve their use it to drive business
business. The same basic informa-
insights.
tion is contained in this
Although its impossible to paragraph, but the database
know for sure, some estimates say 80-85 that stores the text cannot tell us so. This
percent of the data handled by modern database is organized around different
businesses is unstructured data. Even as pieces of text, dates, times and the users
the volume of structured data explodes, who post to the forum.
unstructured data grows even more quickly
because of the shift to social business. Examples of unstructured data also in-
Customers never talked back to the brand clude e-mails and notes from call centers.
before. Now they can, and they do.
UNSTRUCTURED DATA
WHAT IS STRUCTURED DATA? HAS CROSS-FUNCTIONAL
The structure in structured data comes BUSINESS VALUE
from an abstract model that is created to The best way to get a good view of your
describe the data. The model gives names business is to look at a mixture of unstruc-
to each field in a database and defines the tured and structured data. Lets return to the
relationships between the fields. Take, for example of the defective GPS to demon-
example, an automobile manufacturer. strate how both kinds of data are important.

ART & SCIENCE 49

by Akash Bhatia
Assuming that the defect is present across
multiple vehicles, the automaker will find
out eventually, from service center records
(structured data), that there is a flaw in
the component. It will then launch an
investigation into the root cause, craft an
appropriate, cost-effective process for
handling the defective part, and then com-
municate and train its service centers on
this process.
The sooner this process can be developed,
the lower the overall cost of the defect will
be to the automaker. Hence the earliest
warning benefits the automaker the most
especially if this warning comes before
customers even start showing up to have the
defect repaired (unstructured data).
For certain vehicle components, it may be
more cost-effective to simply replace a de-
fective component than try to diagnose the
problem and fix it. Hence, the service center
records (structured data) may contain very
little data about the symptoms of breakages,
while the online forum postings (unstruc-
tured data) may contain a lot of detail and
this information would be necessary to
determine the root cause of the problem.
Knowing the root cause can help ensure
that future components do not carry the
same defect, and perhaps help the auto-
SQUEEZING INSIGHTS FROM DATA
Internal Sources
Unstructured Data
Email
Call Center Transcripts
Forums, Blogs
External Sources
Social Networks
Forums, Blogs
Videos
Text Mining &
Human Analysis
Internal Sources
CRM
Structured Data
Point of Sale
Service Tickets
External Sources
Industry Research Data
Financial Market Data
50 ART & SCIENCE
maker get compensation from third-party
suppliers.
And for public relations reasons, its in the
companys interest to contact a customer
who is having service problems and cor-
rect the problem at a higher level.
HOW DOES THIS WORK?
No company wants to pay an employee to
sit and search automotive forums all day,
counting potential issues and taking notes.
So IT managers need a system that moni-
tors not only the structured records from
its service centers, but unstructured data
from online forums, twitter streams, blogs
and other types of digital social media.
Luckily, search and indexing technology
to monitor publicly-available unstructured
data is abundant. So is business intelli-
gence (BI) technology that enables manag-
ers and statisticians to define and create
the reports and predictions relevant to
their business.
The third technological pillar of an
unstructured data mining system is text
mining the use of computer processing
to understand patterns and trends in text.
It uses techniques such as natural language
processing to help understand syntax &
context, sentiment scoring to discern posi-
tive and negative attitudes, and intelligent
Dashboard
& Alerts
Reports
Automatic Feeds to
Other Systems

data joining to incorporate key elements
from structured data.
Text mining technologies have developed
at a rapid pace in the past decade and
have become relatively sophisticated, but
there is still no out-of-the-box text
mining solution that plugs into existing
BI systems. Thats because every busi-
ness has unique discovery needs after
all, every business is concerned with its
own products, its own unique network of
competitors, and its own industry. And
every business has its own
internal unstructured
data sources to consider.
Thus, insights are
squeezed out (see fig-
ure, facing page) by analyz-
ing multiple sources of
data using a mixture of
clever software and hu-
man assistance. This last
part is important; most companies simply
rely on software alone. The right solution
is a mixture of human intelligence and ef-
fort along with soft-ware. Art and science,
if you will.
WHAT KINDS OF DATA CAN
WE DO THIS WITH?
Thankfully, text mining can be applied
to any available data source, provided
it is made of or can be translated into
text. Companies can now understand
the contents of e-mails, call center notes,
RSS feeds, user groups, Facebook prod-
uct pages, twitter feeds, chats, SMS texts,
reports, letters, presentations, word pro-
cessing documents, surveys, white papers,
marketing material, web pages or audio
recordings.
Techniques have even been developed for
analyzing the content of still and mov-
ing images, although the latter is still in its
infancy.
So where do you start?
Social Business
CALL, CHAT AND EMAIL
TRANSCRIPTS FROM CUSTOMER
SUPPORT OPERATIONS
Most companies accept phone calls and
emails from customers, and more and more
are able to interact via chat. The records of
these interactions typically have only basic
structure perhaps a high-level classifica-
tion, plus date and time, with the most
important information residing in a blob of
transcript text.
Analysis of customer support
transcripts can not only help
companies understand the
details of issues that their
customers face, but can
help them standardize and
streamline their customer
support processes. For ex-
ample, an online retailer might
mine transcripts to identify the
phrases used by the best
customer support agents at resolving returns
calls, and add these phrases to the standard
scripts to replicate success.
SOCIAL MEDIA ACTIVITY
Defined simply, social media is anything
thats being said about a company outside
the control of the marketing department.
The most prominent venues include Face-
book, Twitter, forums, blogs and media
sharing sites such as Flickr and YouTube.
Consumers are creating an explosion of
data there, and smart companies have
active Social Media Listening teams or tech-
nologies to tap into this data stream
and act on it.
SOCIAL CRM DATA
Many companies, especially those with
intensive sales, service or support processes,
are launching social networks and forums
on their own digital properties. These
forums help company personnel structure
their interactions with customers, enable
re-use of content, and bring down costs
by enabling customers to actually support
ART & SCIENCE 51
by Akash Bhatia
Look for the following attributes when looking
for the viability of unstructured data.
Clarity of Keywords
With what level of confidence can we identify
the relevant keywords?
Ability to attribute demographics
Can we attribute the voices to relevant
market segments?
each other. Most companies start out
with comprehensive human monitoring
of their forums, but as the activity levels
grow, this often becomes too labor-inten-
sive to scale.
While social CRM platforms typically
include some data structure, such as dis-
cussion categories and contributor ratings,
mining the meat of the discussions
can be rewarding. For example, a semi-
conductor manufacturer might choose to
monitor its engineer forums for mention
of competitor products. This could help
it learn about features that its customers
are interested in that the company doesnt
currently offer, or even about customer
accounts that might be in danger of being
lost to competition.
And dont just give the unstructured data
assignment to marketing and IT. Although
most of the attention is typically focused
on marketing in getting better infor-
mation about potential customers, or
customer service there are many other
scenarios where insights can be shared
across other business units to reduce costs
or provide better service.
For example, insights from customer sup-
port can be used to drive product lifecycle;
or research from competitive intelligence
can drive R&D investment. HR can learn
what recruits and prospective employees
say about the company in social media,
and it can learn why employee turnover is
52 ART & SCIENCE
Ability to associate comments with leads
Can we create new leads or attribute comments
to existing lead records?
Ability to respond
Are we able to craft and deliver a relevant
response to the customer?
on the rise. Marketing can test reactions to
various price increases. Product develop-
ment can learn which features customers
are responding most to.
SERVICE PROVIDERS
With this much opportunity, there should
be a clear market leader in unstructured
data analysis. Instead we have a host of
competing tools & vendors, making the
tool / services selection difficult.
In general, the tools / services fall into
three main buckets Business Intelligence,
Online Analytics and Predictive Analytics.
The BI market is well established and domi-
nated by Oracle, IBM and SAP. The online
analytics space has been attracting the most
attention (especially social media), but the
rate of innovation in this area is slowing.
The area that usually comes last to mind for
most companies is predictive analytics, yet
the most rapid innovation is occurring in
this space.
Unfortunately, there is no ERP
for analytics.
GAME PLAN FOR SUCCESS
Thus, although the opportunity for making
use of unstructured data may be clear,
there are a few challenges in making this all
work together. We recommend a struc-
tured game plan focused on business value.
First, companies must try to articulate the
business value that unstructured data would
 Social Business

add; most attempts at a justification will be companies suffer from a fragmentation of

illustrative and not grounded in facts, so
beware the tyranny of numbers here.
Second, companies should hone in on
the functional domains to be covered and
define the business scenarios that would
be impacted by such analytics. It is in this
phase after the business scenarios have
been articulated that we recommend the
choice of technology vendors. The market
for service providers and vendors is con-
fusing. Most of the investment dollars in
this area usually go to the safe areas (BI)
or to the areas that have the most hype
(Social Media analytics). Dont be like ev-
eryone else; look at some of the emerging
opportunities as a way to differentiate your
data-mining program.
To make this all work, companies need to
consider an organizational angle, too. Most
ownership of data - i.e., there is no Infor-
mation Czar with the authority or man-
date to tap data from multiple business or
functional units. You may need to assign
someone with cross-functional reporting
relationships to own unstructured data for
the entire company, or at least groups of
related functional areas
(e.g. Sales and Marketing or Customer
Support and Product Management).
Companies most likely to succeed in this
new age of social business will use
analytics to drive competitive differentia-
tion and tune up HR, marketing, sales and
support. Theyll start small, figure out
where the business value really is, and make
analyzing unstructured data someones full
time responsibility.

About AKASH BHATIA

Akash is a Senior Principal in the Manufacturing practice

of Infosys Limited.

He is an expert in digital operations and IT strategy, and has helped several global
organization on digital business strategies, process improvement, and implementation
management.

Prior to Infosys, Akash was an early employee of a software startup (since acquired
by IBM), where as a product manager, consultant and general man Friday he
Akash_Bhatia@infosys.com helped define, market and sell portal dashboard solutions. He has graduate degrees
in Physics and Computer Science.

Q&A
Q What is your fundamental rule of Q Forecast the biggest trend of the
consulting? next five years.
Simplify the complicated. Consumerization of IT or Enterprisation
of consumer IT. Fancy ways of saying
Q What would you never be caught I like the way Facebook, iPad, iPhone,
without? Twitter and Skype work for my life, and
My pants, at least in a business setting, I would like the same at work. Please.
and a sense of humor.

ART & SCIENCE 53

by Pete Maloof & Brandon Bichler

WHY PROJECTS FAIL

Improve Your Odds of Success

S
omewhere in a boardroom right now, a $50
million business transformation project
is getting the green light. For the next
several years, it will consume massive amounts of
the companys resources, and generate reams of
requirements documentation and process flows.

And in the end, the project will fail.

54 ART & SCIENCE


This shouldnt be news to anyone.
The facts have been known for years.
The Standish Groups CHAOS Report
S UC
CE
S
S
16%
44%
53%
31%
1994 2008
SUCCESS CHALLENGED
In 1994, 84% of all major projects were either
challenged or cancelled. Fourteen years later,
68% of projects still meet that same grim fate.
An ongoing study by the Standish
Group has shown that only a third of
major business transformation initiatives
achieve success on time, on budget,
and with the features and functions
expected. Only 33 percent! A quarter of
them are complete failures, and the rest
land somewhere in the middle: coming in
late, running way over budget and, most
often, delivering disappointing results.
And yet, like gamblers at a Vegas craps
table, executives continue to roll the dice,
hoping to beat the odds and come up
with lucky number 7. Why do they do
it? Maybe they feel that this time will be
different. Or perhaps theyre counting on
the possibility that theyll be long gone
by the time the accountability chickens
come home to roost.
Or maybe theyve come to accept the
fact that this is the way it is long-
term projects rarely produce the results
expected. And this fact is so widely
accepted, the actual consequences for
failure are minimal.
In the end, its very likely that they
simply dont know a better way. The
typical process cycle analyze, gather
Why Projects Fail
requirements, design, build, test, and
deploy is thoroughly ingrained in the
culture of most organizations, and its
followed by rote. Companies continue to
do the same thing, each time expecting
different results.
SU
C
CE
WHY PROJECTS FAIL:
SS
32%
THREE KEY MISTAKES
But it doesnt have to be this way.
24%
There are three major mistakes
companies make in their transformation
projects that, if avoided, would improve
their odds for success:
IMP
IM
IMPAIRED
PAIRED
1. They fail to recognize the importance
of the set direction phase;
2. They believe software alone can fix
their process problem; and
3. They neglect to conduct pilots of
the solution at points where failure is
relatively benign and cheaper to fix.
Lets look at each of these problems in turn.
MISTAKE #1
UNDERESTIMATING THE SET
DIRECTION PHASE
Theres a familiar pattern to the way
projects are born. The CEO issues a broad
declaration to Wall Street and to the firm
We will grow to $15 billion by 2015!
Suddenly the funding spigot is wide open
and everyone scrambles to lap up their
share, dusting off pet projects from their
long-dormant wish lists.
The VP of Sales bends the CEOs ear,
claiming the sales force has been hobbled
for years by bad software. Its time to rip
it out and replace it with something that
works! Make it so, the CEO orders,
sending the IT people into a frenzy,
evaluating software, getting a systems
integrator on board and working feverishly
to get the project going before the funding
is turned off.
ART & SCIENCE 55
by Pete Maloof & Brandon Bichler
This is the kind of situation that leads
to bad decisions and failed transformation
projects. The pipeline has been closed for so
long that once it opens, theres tremendous
pressure to start delivering value right
away. The meter is running and the Set
Direction phase is viewed as pure expense
as opposed to subsequent phases, where
the assets created are tangible and can be
capitalized.
As a result, people are looking to cut corners
and shave costs. And not enough time
is spent making sure everyone shares the
same vision of success. The CEOs definition
of success may differ from a directors,
for instance. And those definitions arent
particularly solid or well thought-out in the
first place.
Its not enough to look at the business
case to determine what the end solution
will look like. You really need to ask the
question in terms of how this will affect
customers internal and external and how
those customer benefits will be
captured.
The problem was first
illustrated in a seminal
study a few years ago by an
influential market analyst firm.
Executives were surveyed about their
priorities and concerns at both the outset
and completion of a major transformation
project.
During the Set Direction phase, budgets
and schedules were their top priorities,
and delivering measurable business benefits
ranked in the middle of the
pack of concerns.
But once the project was concluded, the
concerns flip-flopped: a majority of
executives complained that the program
did not meet quantifiable business objectives, while
budgets and schedules landed near the
bottom of their concerns.
56 ART & SCIENCE
What happened?
Among other problems, these companies were
in such a hurry to minimize their investment
and move past the Set Direction phase that
they neglected to set a clear direction.
The Set Direction phase should continue
until three tasks are completed:
First, come to a clear understanding of
what will drive value for customers. This
involves a detailed analysis and drill-down:
What markets are we in?
Who are our customers in each
business unit?
How can they be segmented?
What will it take to win that customer in
each segment? What will success
look like?
Second, develop a clear understanding of
what
will drive value for the company:
How will we grow
revenue? By broadening
our customer base or
increasing revenue from each
customer?
If we want new customers, who are they?
If we plan to grow organically, how are
we going to do that? Is it a matter of
pricing? Cost optimization?
And unless youre running a
philanthropic organization, value for the
customer should translate into value for
the company.
Third, figure out what capabilities
are required to create customer and company
value.

Here you have to conduct an end-to-end
process continuum analysis, to show
what the desired customer experience will
look like across the enterprise. Include
all stakeholders from sales to order
management to fulfillment to installation
to customer service.
Too often companies waste endless
amounts of time gathering requirements
when they should be defining
capabilities. Requirements-gathering
relies too much on anecdote Sheila in
Accounts Receivable wants a specific
feature that will make her job easier.
Never mind that it costs $125,000 and
has no quantifiable benefit.
Instead, they should ensure capabilities
are driven by features that customers
actually value. Armed with that
knowledge, companies can set a direction
that truly addresses customer needs.
Take the time to answer these three
questions upfront, and the overall odds
of success will go up dramatically, while
total investment over the long term
should decrease.
MISTAKE #2
BELIEVING SOFTWARE ALONE
CAN SOLVE A PROCESS
PROBLEM
Software vendors can be aggressive in
selling the sizzle of their software, and
executives tend to eat it up like a big
T-bone steak.
And its no wonder. Theyre hungry! And
overwhelmed, with data, processes, internal
resource performance problems. Between
web interaction, call center reports, emails,
service calls, chat forums, and social media
sites, communication is all-encompassing
and never-ending. Companies struggle to
get a handle on it all and properly interact
with the customer.
So when a software vendor shows up
Why Projects Fail
with todays special on a silver platter,
the initial cost may be the least of the
companys concerns. But once program
sponsors commit to a system, they begin
to understand its true costs. They try
to minimize the rest of the program by
taking short cuts software gets randomly
customized, test cycles are reduced, any
effort at change management is skipped.
And they discover too late that software
alone cannot fix process problems.
Without a clear process for handling
prioritization and weighing such issues
as customization versus standardization,
chaos reigns. Personality and subjectivity
rule the day, and people overrun the
process.
When looking for where to start or what
to improve, trust your customers, not
just the loudest guy in the room. Getting
back to our VP of Sales (and hes just
todays example it could just as easily be
marketing, manufacturing or anyone else),
he might grab the CEO and complain,
Were spending too much time keying
stuff into our CRM tool. I dont want to
key anything in. So to make his rainmaker
happy, the CEO sends down an order:
Were going to stop keying stuff in.
Now the order management and
fulfillment people who rely on that data
dont have the information necessary
to do their job, and they get the order
wrong. So when the order shows up in
New York instead of Omaha, the sales
guy is now resolving customer support
issues instead of focusing on his next
sale. All because one influential person
ended up setting the priorities for
transformation.
The voice of the customer adds a powerful
element of objectivity to the internal
debate. Too often, political considerations
and whoever pounds the table the hardest
wins the day. Rather than appointing a
person to make decisions, its better to
ART & SCIENCE 57
by Pete Maloof & Brandon Bichler
establish a decision-making process founded
in customer value.
MISTAKE #3
NEGLECTING TO PILOT WHEN
FAILURE IS CHEAP
The third major mistake in transformation
projects is a failure to discover critical
problems early on in the process when theyre
easier and cheaper to fix.
The Deployment Phase, when youre 18
months into the project and about to roll out
the solution to three countries, is a bad time
to realize the design decision you made in the
beginning was the wrong one. If youre going
to fail, you want to fail early.
One technique that many companies have
found valuable is a conference room pilot,
which is a safe environment where they
actually invite failure. The conference
pilot brings all the stakeholders from
technology, business and operations
together in one room, to experience how
a future process would work.
Its like kabuki theater for IT geeks. Its a way
of portraying solutions in as much detail as
possible, through pictures, slides and demos.
It brings the process changes and customer
experience to life in a rich way that could
never be achieved with hundreds of pages of
requirements on paper.
The conference room pilot breaks down the
process in a clear way and asks questions
like:
What customer are we trying to win?
What does the business transaction look
like?
How do we market to them?
How do we sell?
How do we capture orders?
58 ART & SCIENCE
How do we fulfill orders?
How do we contact customers?
How do we provide customer service?
And it plays all of that back in front of
stakeholders and executives.
The conference room pilot is neither
clean nor quiet nor perfectly scripted.
Its interactive and messy. Its not a time for
executives to sit back and watch. Its a time
for them to get up on their feet and poke
holes in the solution. Its not intended to
be a bullet-proof representation of the
To be solution; its a way for participants to
identify gaps and inconsistencies.
The conference room pilot provides an
early opportunity to view the business from
end-to-end. It tests assumptions and forces
all the stakeholders to agree on and validate
the solution direction. By the end, youve
established clarity around where youre
headed before youve made the serious
investments in getting there.
Its a major commitment of resources, but it
sure beats failing on a big stage, publicly and
in front of your customers.
CONCLUSION
When it comes to taking risks, most
executives have a split personality. On one
hand, they fearlessly roll the dice on big
transformation projects, ignoring the well-
documented evidence that the odds for
success are against them. On the other hand,
they tend to fear failure when they should
embrace it the most at the early stages
when the costs are minimal.
That, along with setting the right direction
from the start and replacing anecdotes and
subjectivity with an objective process, can go
a long way toward improving your odds for
success.
 Why Projects Fail

About PETER MALOOF

Peter Maloof (an ex-Infoscion) was a Senior Principal in the Process

Transformation practice of Infosys Limited. With over 19 years of consulting
and industry experience, he has been both a consultant and a client. Peter
started his career in political consulting, which, he often states, is just
marketing for a one day sale.

A seasoned leader and Six Sigma certified Black Belt, Peter has led
Customer Operations transformations for various clients. He has also received
the top business consultant in the world award from his son, Aidan.
Peter Maloof

About BRANDON BICHLER

Brandon Bichler is a Partner in the Process Transformation practice of Infosys

Limited.

Brandon has been delivering large-scale, IT-enabled business transformation

programs across Europe, Asia and North America for the past 15 years.
He joined Infosys from Tyco Electronics Power Systems, where he led several
business transformation initiatives as head of European Supply Chain
Operations. Brandon began his career in Price Waterhouses management
consulting practice.
Brandon_Bichler@infosys.com

Brandon holds a degree in German and Political Science from the University of Texas at Austin. His
band Sub Ether Radio has an album (Fuchsias Jewel) available on iTunes.

ART & SCIENCE 59

Leonardo da Vinci, master of art & science