Archive for the ‘Project Management’ Category

Preventing Success Bias in Client Priority Lists

2013-03-04 17.35.08An interesting question came in on our discussion of client priority lists asking “Isn’t there an inherent success bias built into any client priority list?”. This is a great question and great observation. There is definitely a built-in bias with these lists because by nature they tend to include accounts that have either the biggest production or the biggest upside relative to the rest of the client base. Also these lists tend to be modified continuously to add accounts that have recent increased focus and to remove accounts that are proving difficult to realize their opportunity. These factors lead to lists that are artificially positive/successful and are also difficult to track their overall success.

I have some guidelines to help address these problems.

1) Set a schedule on when lists can be modified. Ideally lists shouldn’t change very often, maybe once or twice a year. Any more and it would be difficult to allow for any traction of new prioritization and it will make the list difficult to track and evaluate.[more…]

2) Define clear rules around how and why a list is modified. In the most formal form, a committee can be created to evaluate the composition of the list and the details of the service offering. The committee should be comprised of representatives of all client-facing groups and all should have a voice. Make sure that any addition or upgrade in the list is matched with a deletion or downgrade in order to keep consistency in service across the platform, and prevent the list from continuously growing.

3) Measure and track the performance of a list like an investment portfolio in order to track the success of the program overall. The “performance” of the program can be viewed as performance year-to-date, over 1 year, over 2 years, etc. Performance of dropped/downgraded accounts should factor into the overall performance over time. It’s important to realize that what you want to understand is not only the impact of an account being on the list, but also whether all the components of the program are working to promote the programs goals.

4) Although this final point may be overkill, it has proven useful when testing new client prioritization programs. Each time a new priority list is created, it should be labeled and tracked separately. For example, you could have 1H 2012, 2H 2012, 1H 2013, and 2H 2013 as separate lists. Overall this is a good benchmarking exercise to help test assumptions about the list and component parts.

There’s usually a concern that by putting too many rules around client priority lists, the organization loses flexibility in targeting resources to potential opportunities. Managers need to find a balance between that flexibility and a structure that allows visibility into priority list’s effectiveness.

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Implementing a Client Priority List

2013-08-10 15.39.42I received a lot of interesting comments from my post last week on client priority lists. I didn’t think this was a topic that would have such broad interest. Most of the comments were along the lines of “sure, this is what you should do, but how do you actually do it”. I’ll attempt to provide a bit more detail on actual implementation here, driven off of specific comments I received.

“How do you create one list when you have competing purposes and objectives for different accounts?”

It is simplistic to assume that one list with a simple purpose is going to satisfy all needs for client prioritization, especially at larger firms. When creating your list, we recommend implementing a combination of different tiers and a series of qualifiers that designate the kind of accounts they are and what kind of service they require to achieve a specific objective. It’s important for the organization to all be on the same page on who the priority accounts are, but also have an ability to see what specific service model to apply.[more…]

“How do you go about defining, articulating, and communicating differentiated levels of service?”

We recommend putting together a service charter that describes three things: (1) what the differentiated level of service is for each tier and client type, including non-tiered accounts, (2) who is responsible for providing a certain service and what the expectation is on them, and (3) how each point of service is going to be measured and monitored. This charter should be part of the communication of the client priority list when this gets published.

How formal the communication is depends on the size and nature of the organization, but could include emails, laminates, teach-ins, or discussions in team meetings. We recommend having a forum where staff can ask questions to make it crystal clear what is being asked. In our experience people end up with very different interpretations of the asks, so anything that mitigates confusion helps.

“How do you get your resources to follow the new focus?”

People are generally much more comfortable engaging with their usual clients in a usual way. It has to be made clear that the expectation is that behavior needs to change to provide more focus on priority accounts. It has to be made clear that the organization is OK with a deprioritization of non-priority accounts given that there is only a finite amount of capacity available.

What becomes clear very quickly when implementing a client prioritization plan is that some organizations don’t have the right capacity, skills, and relationships in place to execute the plan effectively. These might need to be developed (through training, senior mentorship) or acquired if it becomes clear that they can’t be effectively nurtured in-house. In many cases, it may be most effective to acquire personnel with already established relationships and skills. In the harshest sense, this would call for an upgrade of existing staff.

“How do you ensure compliance and how do you track the success of implementing the list?”

A client priority list isn’t a static document. It should be part of the day-to-day life of the organization. To the extent possible, it should should be systemized and included in the any routine reporting, including:

  • Inclusion of a priority indicator for a given account in any dashboards, reports, and screens used by staff and management.

  • Periodic monitoring of services provided and communications to priority accounts, through a CRM or similar systems.

  • Benchmarking performance and activity of these accounts, against different tiers as well as non-priority accounts.

  • Monitoring of changes in depth of relationship and penetration over time.

In the end, the success of the list will be measured on the absolute increase in performance of these accounts, but also in the relative outperformance of the rest of the client base.

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Developing Effective Client Priority Lists

Photo Aug 28, 4 42 35 PMIt’s often quoted that 80% of revenues originate from 20% or less of clients. To focus on these clients, It’s common practice in most businesses to create lists of top accounts to establish which accounts are most important and designate different service models for these clients. These accounts should get elevated service relative to other accounts, including preferred pricing, priority access to services, coverage by the most experienced team members, and more intense engagement by senior management.

It’s not as simple as creating a simple list of top clients and sending it out to sales and service teams. There are many things that need to happen in order to ensure that there is a meaningful change in behavior regarding these clients and that the client’s themselves understand their status.[more…]

Defining the List

The first step in creating a list of priority clients is to define the purpose of the list. Although this might seem self-evident, many firms find that the less clear the objectives of the list, the bigger and more convoluted it becomes. Is the list’s purpose to identify the largest revenue-generating accounts and insure that service remains high to protect these revenues; or is it to identify largest unrealized wallet opportunities; or is it to identify accounts in later stages of a sales pipeline with high probability of conversion? Probably the most common mistake that we see are lists that intermingle cash-cow accounts and opportunity accounts with little differentiation in service defined.

Service Differentiation

Once the purpose is set, then a model has to be put in place to define a differentiated level of service for priority clients. I can’t stress enough the importance of this step. A lot of managers just assume that an “increased intensity” will be provided to accounts on the list, but the teams in the front lines are often unclear on what’s expected of them. Each client-facing team’s tasks need to be clearly defined, not just for priority accounts but also for non-priority accounts in order to establish the difference. The differences in behavior are what make priority list meaningful.

Examples of service differentiators:

  • More resources/more content

  • Preferential pricing / offers

  • Premium access / higher touch service / bespoke resources

  • Priority level of engagement/ timing of engagement (first call status)

  • Senior relationship management / higher experience coverage

  • Further resources/analysis to better understand the account (Internal)

Client Communication

It’s important that clients are made aware of their priority status to the extent that is practical, and doesn’t jeopardize the relationship or relationships with other clients. Clients are very willing to engage with certain counterparties as strategic partners because they feel the value generated through a deeper relationships can be mutually beneficial. I’ll write more on this in a future post.

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Making Strategy into Reality: Effective Project Governance

One of the ways Oboe Partners differentiates itself is that we not only help create market-changing strategies, we help our clients create actionable projects that bring these strategies to life. An effective project governance and management process is critical in ensuring successful execution of well thought-out strategies. A big problem is that many managers have a distorted idea of what project governance and project management are all about. They might have images of sitting in hot, window-less conference rooms with project managers ranting through mind-numbing Gantt charts and bullet points detailing progress made so far and work to the next milestone. There is a place for that in the day-to-day execution of a project, but it’s more important for senior managers to focus on project governance when executing key strategic initiatives.[more…]

Project Governance vs. Project Management

To start, I want to clarify the difference between project governance and project management. Project management is the discipline of breaking down projects into chunks and managing resources to get that work completed within a reasonable time-frame under specific constraints. Senior managers should find project specialists who are experienced in the execution of projects, who are detail-driven, and accountable for delivery. This is a delegated responsibility where senior managers only get involved in minutia only if they feel the project path calls for it.

Project governance is different. Project governance is a management led process that creates the rules in which a project manager and all stakeholders play under to ensure success and to also mitigate down-side risk. The purpose of project governance is to:

1) Get buy-in from all the right stakeholders, and incorporate all relevant requirements
2) Provide controls and oversight on progress and cost
3) Create a platform to address any unforeseen issues that can (and usually do) come up
4) Make changes in direction in the event of changes in the environment
5) Provide for criteria and protocol to kill a project if it’s not realizing its perceived opportunity

A strong governance approach incorporates clear guiding principles and standards, an understanding of dependencies that could impact the project, and contingencies that allow for flexibility as the project evolves. It’s senior management’s responsibility to design and manage this governance.

Guiding Principles and Standards

The first step in setting up a project governance structure is to outline guiding principles and standards that are aligned with the firm’s overall strategies. This all sounds like consultant double-speak, but it’s important for senior management to provide objective guidelines on what constitutes priority work so that project managers can best weigh tradeoffs to ensure delivery of the most critical elements of the projects. It’s also critical to put in place clear decision-making and escalation protocols. Many projects fail not because of lack of want or lack of clear strategy, but because not everyone is marching at the same pace in the same direction.

It’s also critical to define what constitutes ‘success’ and what criteria will be used to measure progress and flag trouble. Everyone should be looking at the same measures and be on the same page on why a project is working or not working. Delays, setbacks, requirement changes, cost increases are all possibilities in the course of any project. With the right oversight structure, they can be easily and objectively managed.

Dependencies & Contingencies

Everyone involved should know what dependencies exist that might impact progress, be willing to raise these for discussion, and address them with resolve. These dependencies could be technical, organizational, resource-based, process-based, or external. The most successful projects that we’ve worked on are the ones that have a constant eye on all dependencies that may have an effect on the project’s success.

Contingencies are put in place as alternatives if a given path followed is not panning out or there’s a shifts in a dependency that is forcing a change. By understanding the dependencies of a project, contingencies can be designed in advance so as to provide flexibility to a project, or at the very least provide clear communication to all the stakeholders.

The Defensive Line

A good way of thinking about project governance is as a good defense, matched up with the strong offense of clear strategy and plan execution. It makes a massive difference in the success of all projects and truly where management’s strategy becomes a reality.

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How Do We Define ‘Strategy’?

‘Strategy’ is a tricky word because it means many different things to different people. Henry Mintzberg, a management professor and writer, offered that strategy has five different definitions:

Strategy as a Plan: a guide or course of action

Strategy as a Pattern: behavior over time, which I think of as an operating model based on focus and core competencies

Strategy is a Position: defined by product or service offerings and their current and intended position in the market

Strategy is a Perspective: similar to position, but more abstract. It points to the “theory” or grand vision of the business

Strategy as a Ploy: specific actions taken to gain headway in the market and to outmaneuver the competition[more…]

Many consultancies talk about having broad strategic capabilities, but are often unclear about what kind of “strategic” expertise and advice they are providing. In many cases they specialize in one of the above definitions, for example developing strategic plans (“Strategy as a Plan), helping the organization clarify their mission (“Strategy as Perspective”), or may have a specialized expertise, like technology (“Strategy as Ploy”).

We try to bring together all the definitions in our thinking in order to get a holistic understanding of all the issues facing the client and apply innovative solutions. We’ve decomposed the Mintzberg framework to help us get to the heart of the relevant dynamics, which then allows us to leverage our functional expertise to define a clear path forward.

1) First we aim to get clarity around the client’s desired ideal business objectives (“Perspective”)

2) Secondly we rigorously evaluate the client’s condition in the marketplace (“Position”) and the unique strengths, weaknesses and opportunities in their operating model (“Pattern”)

3) Next we define strategies that position the client’s resources most effectively and develop systematic steps to realize the desired objectives (“Plan”)

4) Last, we advise and help direct the execution of new strategies, with the help of our project management and technical expertise (“Ploy”)

We bring to the table what we feel is one of the most comprehensive approaches to not only gaining strategic clarity but to bringing strategies to life.

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