In Lean Thinking, authors Womack and Jones list a few distortions in specifying and creating customer value. Here’s distortion #2: engineers specify value. If engineers define value, designs are created with more complexity, the authors say. Also, newer versions of products/services have refinements that are of little interest to anyone but the experts themselves.
In 2004, Fiat lost substantial amounts of money, saw its new car fail, had a staff strike, etc. That’s downhill in most aspects of business. And, as if to make things worse, a new CEO entered — the company’s fifth in only 3 years.
The fifth CEO Sergio Marchionne, however, discovered something. In Harvard Business Review (December 2008), Marchionne says “Fiat’s culture was traditionally dominated by engineers. That has given us some great advantage in developing cars and engines — we have long been at the leading edge in diesel, for instance. But it has also made us rather inward-looking, and part of a leader’s job is to get the organization focused on markets and the competition. In our case, the engineering focus had taken our eyes off our brands, which had been in a long, slow decline.”
Having discovered the problem, Marchionne appears to have fixed it too. Fiat has reduced time-to-market from 48 months to just 18 months. And its bottom line is in the black.
In the business software world too, technology focus creates problems. Here, problems are experienced by enterprises that invest millions of dollars every year in applications. To reduce technology complexity, the software industry did a good job of bringing human factors perspectives and principles into application design. However, poor levels of business process orientation continue to result in two bigger problems enterprises face:
- Technology silos
- Poor business-IT alignment.
Starting in the 1950s, the first era of business software was technology-centric. The second era has been user-centric. More recently, a few software firms have already stepped up to the third era of business software: the business process centric era. These firms have defined value in terms of the business objectives of customer organizations. Here, the fundamental objective is business process excellence. For the software firm, this means keeping the primary focus on customer’s business process performance — regardless of whether the current activity is analysis, architecture, or design.
Software firms should explore stepping into this new era. They may end up scripting a new success story like Fiat did.
