The Impact of Organizing Around Business Value

Transformation doesn’t have to be an all or nothing proposition. When technology is old, monolithic, and slowing you down, it’s tempting to scrap it all and rebuild from scratch, all at once. But, that takes a long time and simultaneously reduces your ability to satisfy customers and make money.

Instead, focus on improving one business problem at a time. Create bounded domains that have all the people, data, and tech they need to impact a specific OKR or KPI, and modernize them incrementally. This way, you don’t have to wait years to see performance increase and ROI to show up.

Video Transcript

Guy Beaver

The business domain language, where it gets real effective, it’s not in it’s a data mesh, it’s not in it’s alignment of applications within an encapsulated business, that’s not how we should be talking about it.

It is aligning the organization to a P&L and what things are getting in the way of that part of the business and encapsulate the way their organization might be structured anyway. All that to say, the forcing function of focusing is the power of doing that. Because at the client we’re talking about, they caught onto that and it was like when we were talking about prioritization always it was, well that’s not this domain. And they were all focused on getting a close rate improved because of the clear line of sight to revenue. If they could get the close rate to go up 300 basis points, the numbers showed that would be 200 million in revenue. So that’s the drum that just kept everybody focused. We’re not talking about that domain yet. We’re doing the call center first.

That’s the power of encapsulating all that. And it gets to what about your technology stack can improve that KPI and getting that understanding upfront brings the business to the table passionately because normally whatever that KPI is, somebody’s bonus is tied to it or everybody’s bonus might be tied to it, but usually there’s a leader who cares about that and he’s got a technology need that could help that number. So that’s what we lined up in the analysis piece of it is what applications, what data elements, what are the things that constrain you from getting that KPI to the number you want it to be?

Mike Cottmeyer

So, you talk to the client and you say, what is the KPI that is going to move the organization most effectively, whether it’s going to be producing more revenue or improving whatever metric, and then it’s like what part of the business is responsible for it? What are all the technology assets that are either enabling or detracting from our ability to do that? And then the hypothesis is if we can get the OKRs, the KPIs, the business organization and then get the technology assets and data aggregated underneath that business object, then that business becomes responsible or in control of its destiny. Is that kind of where we’re headed?

Guy Beaver

And remember the context is our platform needs to be modernized and we’re giving them the path to doing that that will show results as fast as possible and justify the spend.

Mike Cottmeyer

Well, that’s the interesting thing. So I think a lot of times what happens is that people approach from the perspective of like, well, we need to improve all of these OKRs and KPIs and the technology is legacy and it’s in our way and we can’t change it fast enough, so therefore we want to either ditch the existing platform, move it into a CRM or something, or we’re going to modernize the whole thing so that we can start to make changes to it. And what you guys fundamentally did is you said, okay, we’re going to take the business problem, figure out what part of the organization is responsible for it, aggregate the technology assets and the data underneath it and extract and modernize that piece of it so that we can move the financial needles, the KPIs as quickly as possible and start showing return on investment.

Guy Beaver

And with this client, the additional thing was what is your differentiator in market? And that platform was supporting that. That’s how we made the decision of build versus buy and their business process was amplified by the platform they had. It just couldn’t scale.

Mike Cottmeyer

Yeah, so the specific under that, if I recall correctly is that they had a homegrown system that they had built from scratch that was kind of their secret sauce. When you say what was their differentiator, their market differentiator was this homegrown platform. And so the initial ask of us was basically, should we rip and replace it? Should we rebuild it? What have you? That’s actually a fundamental thesis of our private equity mergers and acquisitions. A facade is that I think a lot of these private equity roll-ups have technology that they’ve built that is their secret sauce and a lot of times the private equity playbook is ripped that out and put it up into Salesforce or something like that or put it up into SAP, but then they either have to customize that software a ton in order to be able to duplicate the secret sauce or they lose the secret sauce

Guy Beaver

And they lose their data. There’s a whole lot of reasons why you need to carefully consider that for sure. And then with the way software is getting these days, you can go fast with the right people and the right tools and going faster means you can do things for less cost.

So, we had a nice measurable return on investment because we could show right away their sales were improving and once you get into that cycle where you’re generating a return on investment as you go, instead of having to wait at the end and hope you get it, that’s the key. That’s what you look for when you’re doing these approaches, how do you get ROI to track your spend?

Mike Cottmeyer

One of the things that I think about with this particular client a lot is they had a hypothesis on how they wanted to change the software. They had hypothesis on what would move the KPIs. Is that correct?

Guy Beaver

They did. They had across the board the set of KPIs. The neat thing is it tracked their customer journey. So, we came in with use case approaches and they really were lined up with moving from initial lead all the way to, well initial lead assigned the best inspector to go sell their products. So that had some scheduling opportunities that as we had these conversations in the context of the encapsulated domain, we realized with them that, hey, if you could get the call center to schedule the effective person automatically versus having to manually see who’s available, that’s going to help. As we built that out with them, the discovery was things change between the time you schedule that inspector to as you get closer and closer to the date, what if we look at the last couple of days in, is there an inspector who has a better close rate for this problem?

Guy Beaver

And that was what really paid for this effort because they could show hundreds of thousands of dollars a day and potential deals that could close better if they had the right person assigned at that last minute based on appointments canceled, different things happen. Hey, this guy’s available to go do this product, put them in there and we could measurably show before and after those reassignments and that’s where the effort paid for itself.

That same pattern is going to be used as you go down that customer funnel. They also have the same production crews come in and do the work. So, you can schedule those crews in advance and then as you get closer and closer to it, a lot of cost savings can happen if you get a crew, the right crew at the right house at the right time. So, they’re expecting similar gains for that. The follow on is service opportunities that come from it. They have to schedule service in the same way. So that same pattern of, and we’re going to automate it and take that into machine learning on a finite set of variables that we’re doing the exploratory data analysis to discover which variables to pay attention to. It’s just going to grow. The value they get out of this approach is going to grow over time.