All Posts in Policies and Procedures

|In: Leadership|Last Updated:

Like the rest of the country, Minnesota is in the throes of the “tax revolt.” It’s premise is that we can cut taxes without pain because there’s plenty of waste in government. Somehow, though, when budget-trimming time rolls around, the waste pulls a vanishing act, and we’re told we have to make painful choices.

Sound familiar? It should. It’s the public sector equivalent of “eliminating non-value-adding activities,” a sham exercise American business executives buy from expensive executive-suite consultants for similar reasons: They want it to be valid, because if it is they can increase profits without having to make difficult choices.

Are there wasteful government programs? I’m sure there are, although most of the examples I hear are either rounding-error-size activities, programs whose value or lack thereof depends on the political philosophy of the observer, or employment programs that simply recycle tax dollars into the economy where they turn back into tax dollars. I’m equally sure the real waste in government hides where nobody is looking for it: Not in the list of programs but in their execution.

If anyone really wanted to find government waste they’d be asking line employees, front-line supervisors and middle managers where they spend money and effort stupidly, and why. But doing that would require painstaking effort to assemble a detailed understanding of how things are put together. More, it would require a form of taking responsibility that’s become increasingly unpopular: Those making the rules would have to acknowledge that the rules they’ve established are often the problem.

The same is true in business. While many businesses indulge in pet programs that don’t contribute much to the bottom line, they’re hard to distinguish from pilot projects that could pay huge dividends in the future. So the search for non-value-adding activities usually yields just a single item: The very expensive search for non-value-adding activities. After all, very few employees, or managers, or executives go to work every day saying to themselves, “I think today I’ll find a new way to squander the corporate budget on pointless efforts that distract us from building great products and attracting and retaining customers.”

What does happen is that somewhere in the rules, regulations, policies and procedures — often those created to prevent mistakes — lie opportunities to work more efficiently. As in government it’s the line employees, front-line supervisors and middle managers who know where to find them. The problem is also the same as in government: They have no place to take a good idea, nor does anyone actively seek the good ideas they have.

Here’s an example every manager in the federal government knows, but which hasn’t been fixed despite 25 years of tax reductions: Use-it-or-lose-it budgeting. Intended to reduce costs, it has the exact opposite effect. It requires every manager in government to engage in a year-end spending spree, not because they’re irresponsible but because, just like their private sector counterparts, they need to make sure they have enough funds in next year’s budget to get the job done.

Imagine the impact of a change in the rules. Instead of cutting next year’s budget if this year’s numbers look good, the opposite happens. Managers, supervisors and staff share 20% of the savings; another 20% is carried over to the following year, and the remaining 60% goes to cutting the cost of government. Is there any doubt what would happen?

That’s just one example. (It’s a freebie. If your local government would like to engage the services of my consulting company, we’ll be happy to find others.) It illustrates an important point that applies to your business and IT organization just as much as it applies to government spending: If there’s waste to be found, finding it will require two changes in attitude.

The first is that the waste will be easy to find and eliminate. It won’t. It will lie in the details of day-to-day work. While some opportunities will be easy to spot, most will require significant digging. Eliminating the waste will always be hard, calling for intelligent organizational redesign, strong leadership, and political courage. The most difficult part of all will be finding the benefits in accounting reports, which rarely reveal the connection between cause and effect.

The second change will be an even harder one for many business executives to accept than the first. It’s that the fault, to paraphrase Cassius, lies not in their employees but in the unintended consequences of their own decisions.

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|In: Industry Commentary|Last Updated:

Customer Elimination Management (CEM), a term coined by Direct Marketing Hall of Fame member (and father of your loyal author) Herschell Gordon Lewis, is Customer Relationship Management’s evil twin. It is, ironically, the unofficial goal of many putative CRM initiatives.

Don’t believe me? Here are two cautionary tales from the CEM archives:

Our first lack-of-service provider is a well-known credit card company. One of its credit cards sits in my wallet. Nonetheless, I receive promotional mailings from this company every week offering me pre-approved credit cards. As with its competitors, most of these mailings offer me a low, low initial APR of they-pay-me-to-take-their-money for the first three months, after which they make a Mafia loanshark look like a piker (I think “APR” stands for Abysmal Public Relations, but I’m not sure). Customer disloyalty programs like these, that reward non-customers while penalizing current ones, are a hallmark of CEM programs.

I actually opened one of these mailings, disguised as it was as a monthly statement, and read of a new card offered by the company that awards travel miles. My current card doesn’t do that, so I called, only to find that no, they can’t add travel miles to my existing account. They would, however, be more than happy to give me a second card that does award travel miles. All I’d have to do is fill out an application.

Hold that thought.

Second company: A Wi-Fi service provider. As it handles an airport through which I travel rather frequently, I have an existing account. So when I was traveling through another airport recently for which the same company provides Wi-Fi services, I decided to sign in, only to see …

A different login screen — this one asking for my cell phone number and offering to add the cost of the service to my cell phone bill. A bit of searching reveals that you can just give it a credit card instead, if you’re the kind of heathen who uses someone else’s cell phone. But nowhere can I login using my existing account.

Who cares — it costs nothing to open an new account, so I start to do so, when a link to the company’s privacy policy catches my eye. It’s a good privacy policy, too — ironclad protection of my personal information. There’s even a “supplemental privacy policy.”

To provide further safeguards? Here’s what it says: “We disclose that information, and you consent to such disclosure, to those merchants involved in the transaction, to your credit card company and bank, the merchant bank, merchant aggregators, Payment Processor and other companies or service providers used to facilitate or complete the transaction (‘Third Parties’). Information about you received by those Third Parties will be governed by their own privacy policies, not this User Agreement or the AT&T Wireless Privacy Policy.”

Which is to say, this provider awards to everyone in the world the right to use my information however they see fit without my ever knowing about it, all the while claiming points for protecting their customers. (Credit where it’s due: Ed Foster has written about this subject, with regard to Ticketmaster, which has a similar privacy policy, in Gripelog — www.gripe2ed.com.) This isn’t a privacy policy. This is a complete absence of privacy policy.

No thanks.

Two companies, two industries, but kindred spirits. Both have invested heavily in customer relationship management. They’ve issued press releases extolling the virtues of their programs and the value they’ve received. Their IT leaders have been interviewed and extolled as visionary thinkers helping their companies advance their business strategies.

Yet neither provider is even able to keep track of me as a customer.

The first wants me to fill out a new application form, to give it information it already has about me, so it can sell me a new product I don’t want instead of providing the service I do want. CEM at its finest.

The second also can’t keep track of its customers — at different airports it uses independent account databases and billing schemes, while hiding a craven lack-of-privacy policy behind the excuse of third-party contracts. It could, of course, have negotiated those contracts to ensure the privacy of its customers, but it didn’t bother.

Neither of these companies has grasped the most basic notion of CRM — that it’s about managing customer relationships.

What about that is so difficult to understand?

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