Achieving excellence through service governance
By Peter Brooks
Achieving excellence for an organization has never been easy. However, recent insights in service governance have provided a clearer understanding of how to go about achieving it.
It is not possible to produce significant improvements in the value an organization is receiving unless you approach matters holistically, across the whole service value chain.
This is easier said than done. So, how do you act holistically?
The first insight is that it is essential to concentrate on improving outcomes, not improving output. An output is an easily measurable result of an organization's activity - a new car, an item delivered to a customer, the number of orders in the past month. An outcome is the final result that a stakeholder obtains from that.
- A new car makes family holidays easier and cheaper - that's an outcome.
- A textbook delivered to a medical student that helps them to pass the exams to become a doctor - being a doctor is the outcome of that delivery.
- Having 40% fewer orders than a month ago can result in a cash flow problem that will cause the organization to go bankrupt in three months' time - the bankruptcy is the outcome.
Outcomes are big-picture, long-term results from activities. We want to reduce bad outcomes and increase good outcomes. Though these are long-term results, we have to work to help with their delivery in the short term; if we wait for all outcomes to materialize, it will be too late.
The outcomes that the organization and its stakeholders require also change over time. In boom times, an organization may wish to be the market leader, and be happy with lower profit margins to achieve this. During a recession, cash flow is more important, so aiming for market share by reducing prices is going to have a negative effect on outcomes.
How is it possible to square this circle? Without a crystal ball, how can we know what to do today that will produce the right outcomes in six months' time?
The first insight is that it is not possible to have a simple, fixed plan that will do this. Our plan has to be flexible, and we need to have the agility to change what we are doing very quickly, as we understand changing demand. Not just demand across the board, but changes for particular stakeholders, in particular conditions, for different services.
What we need is something that will act as a proxy for outcomes. When we know what outcome is desired from a particular service for a particular stakeholder, we need to know what we have to do, today, to make it more likely that it will be achieved.
This is where value comes in. Often, we mistake the word 'value' for one measure of value: money. We say that something is 'valuable' if it costs a lot of money.
This is the wrong way round. The reason that something is worth a lot of money is because it is valuable. Being valuable means that something is worth more to have than the money it costs.
For each service, and each stakeholder (and stakeholders can be employees, users, suppliers, and people who interact with us who have no formal relationship with us), we must understand what value needs to be created to make the outcome more likely.
To do this, we need to actively investigate what outcomes our stakeholders require. We must understand the vision, mission and charter of the board of directors to know the organizational outcomes they need. We must understand our suppliers to know what outcomes they need to continue to be successful in providing us with our requirements. With this understanding, we will gain insight into what these stakeholders value. And then we tailor our services, and the products they use, to deliver the appropriate value to particular stakeholders.
A consultant cannot have a toolbox filled with a template describing what value can be delivered, to achieve which outcomes. Rather, a consultant must have a toolbox filled with tools to help identify who the stakeholders are, what outcomes they require, and where and when these need to be delivered - and from that, what value has to be created to produce these.
About the Author
Peter Brooks is an independent consultant in service governance and management, based in Cape Town. He has 20 years' experience as an engineer, consultant and manager with Hewlett Packard, and 19 years' experience as an independent author, consultant and trainer.
Peter has been a director and chair of the itSMF South Africa, a director of the itSMF International, co-chair of the ethics committee of King's College Hospital Clinics in Abu Dhabi, and has been engaged in clinical research.