“Roxanne? It’s Greg. Is it possible for you to give me a day of your time this week? I need to talk through my thoughts and get your advice about where we go next.”

Roxanne took the call as she was leaving for the airport to visit another client “Hi, Greg, it’s good to hear from you. I’m looking through my calendar . . . let me see. I’m leaving for Chicago today and will be back on Thursday evening. I could arrange to be there on Friday if that works for you.”

Friday wasn’t ideal: he had an 8:00 A.M. to 10:00 A.M. meeting that couldn’t be rescheduled, but he could free up the rest of the day. They agreed, and Roxanne adjusted her schedule to meet Greg on Friday. She was pleased that Greg valued an ongoing relationship between Effective Management and Cosmetics Products, and even more pleased that her relationship with Greg was evolving from educator-coach to mentor-coach. Cosmetics Products would need additional education as they moved forward with additional milestones, but the ongoing work for Roxanne would be mentoring Greg and coaching those doing the work.

“Roxanne, I’m so glad you could make it on short notice.” Greg greeted Roxanne as they settled down to start their discussions that Friday. “I can’t begin to put into words what it’s like now that we’re routinely delivering to our customers 95 percent on time in full. Remember our first meeting? What a difference! And we’ve won back most of the customers we lost. We’re doing well, but there is so much more to do that I’m concerned we’ll overload our teams. I’ve made a list and …” Roxanne stopped him.

“Greg, stop for a minute; you’re beginning to worry me! You once told me, and I agreed, that the status quo was the reason you were in such a mess. Sounds like you might be falling back into that ‘status quo trap.’” Greg was taken aback, not by Roxanne, but by his own words as Roxanne continued.

“Remember that delivering 95 percent on time in full means you’re still lying to one customer in twenty. You’re promising, but not delivering.” Greg was shocked that he had forgotten that discussion. After a short pause, he replied.

“‘Lying’ is a tough word, don’t you think? But I suppose that’s how it must feel to each customer we let down. Come to think of it, that’s exactly how I felt about Cosmetics Products when I was their customer. So, where do I go from here? That’s my question for today. I have a long list of problems and possibilities.”

“Before we get into that, Greg, just talk to me about the current general business situation for Cosmetics Products. Understanding your current competitive priorities will help us determine where to go next.”

Greg spent the next ten minutes outlining the market situation from Cosmetics Products’ perspective: where they had been in the past, where they were now, their competition’s strengths and weaknesses and how their Customer Satisfaction Index (CSI) had improved from less than 20 percent two years ago to 55 percent during the most recent quarter.

It was the first time Greg had mentioned a CSI.

“Greg, you’ve never mentioned CSI before.”

“We knew from the Checklist that we needed to track customer satisfaction, so I adapted the measure we put together when I was with Blackstone. We called it our Customer Satisfaction Index or CSI. In the past I didn’t need a CSI score to tell me we had a big problem. But now with customer service over 95 percent, it can tell us a good deal. We solicit feedback using forms we send along with selected customer shipments, then we take the 10 percent or so that are returned to us and calculate a quarterly score.”

“That sounds like an interesting approach, Greg. Using the same criteria, how does your index compare with your industry sector’s performance? Also, what’s the score for your top three competitors?” Greg was silent; Roxanne continued. “You need a better context and independent view for a useful Customer Satisfaction Index. It’s one of the topics that I wanted to talk to you about today, so I’m glad you brought it up. Here’s my question. What does benchmarking tell you about your performance relative to upper quartile companies in your industry?” Again Greg was silent for a time before responding.

“You know I came in really happy this morning, and now I’m rapidly getting depressed! Do you ever ask easy questions?”

“I don’t necessarily enjoy doing this, but I’ve heard you say, ‘the truth will set you free, but it hurts at first.’ I am so pleased with the progress you’ve made to date. We had a well-deserved celebration of that progress, didn’t we?” Greg nodded. “But now the best thing for me to do to help you is to get your eyes off the past success, get your eyes off the rearview mirror so to speak, and get you focused on the highway ahead. If you, as President, aren’t looking ahead, you’re not in control of your destiny.” Greg stood up and paced slowly around his office for several minutes.

“You know, you and my wife make a great team, Roxanne. So, eyes forward from now on. Let me call Alexandra and David. They know you’re here. I hope they can join us for this conversation.”

Greg knew there was still much more to do, but now he wasn’t as confident about the ideas on his list. His total focus over the past 15 months had been on customer service through achieving the two milestones; it had worked. Now he needed others’ input.

He called his VP of Sales and Marketing. “Alexandra, I’m in my office with Roxanne; can you join us?” He then called David, his VP of Supply Chain and Manufacturing. David, like Alexandra, was anticipating Greg’s call and was available. Greg was grateful that, since they’d nearly eliminated all firefighting, his executives actually had time in their days to manage the business and be available for meetings like this, rather than having to react to the latest crisis.

When they convened, Greg replayed his initial conversation with Roxanne. Their reaction was much like Greg’s.

“Alexandra,” said Greg, “Give us your perspective on our competitive position. How well are we doing in relation to our top three competitors in terms of customer service? And, do we have any customer satisfaction information on them?”

“Well, Greg, the stories I get back are anecdotal at best; no hard data. My people in the field tell me that we’re now at least in the same ballpark as the competition, but we don’t know exactly how we line up.”

“Fair enough. What about our Customer Satisfaction Index [CSI]?”

“It’s around 55 percent, up significantly, but I have no idea how the competition is performing on that basis.”

“Thanks, Alexandra. Now, David. How does our quoted service lead time compare with that of the same top three competitors?” David held his hands palm up, meaning “no idea.”

“Okay, Roxanne, over to you.”

Roxanne reminded them that the Class A Checklist, a benchmark publication in itself, stresses that deep understanding of the marketplace and of the competition is essential for business survival. Using an internal customer satisfaction measure has been proven to be notoriously inaccurate and unhelpful since internal measures don’t provide competitive context. She suggested they use an accredited external CSI organization to get a more objective and useful view of their performance.

Greg changed the subject and talked about his conversation with Penny, which had led him to conclude that Cosmetics Products Division needed to complete its journey to Class A Business Excellence.

“I browsed through all chapters and found lots of gaps, made a list of things too long to be accomplished at one time. I started to create some priorities, but quickly decided to call Roxanne for her guidance.”

Roxanne jumped into the discussion. “Just as your competitive crisis of poor customer service led you to the Capable Integrated Business and Capable Planning and Control Milestones, you should now look at your competitive priorities to determine your next milestones. The path to Business Excellence is laid out in steps that address the most pressing competitive priority at the time so that you realize immediate business improvements. You took care of your customer service problem. With that problem behind you, we need to understand what now is keeping you awake at night. But first, I’m curious, David. How did the installation of that new process line go?”

“It’s been a great success, Roxanne. We took into account what you advised us about planning for flexibility and agility rather than just volume. It took us some time to understand and appreciate what you meant, but the advice was very helpful. As a result of our blitz project and SMED progress, we can now make products economically in smaller quantities and more frequently. Additional capacity constraints have been identified. Some we’re solving with additional capital equipment, but many others have been solved by key operating technicians taking over leadership of several SMED projects. They’ve converted much of the internal setup (machine idle) to external setup (machine running) with almost no expenditures. They’ve built those ideas into many other areas. When you sent Samantha Williams to facilitate our workshop, she encouraged us to learn about Total Productive Maintenance (TPM) and specifically introduced some basic concepts of autonomous maintenance and 5S, the basics of TPM’s industrial housekeeping principles. We’ve actually started to learn more about those concepts. Although it’s still in its early stages, we’re seeing benefits from these initiatives, much of the gain coming from our employees’ involvement. Exciting times on the shop floor! That, and the new process line, is how we’re enjoying more capacity along with increased flexibility and agility.”

“Greg, what David said is extremely important. It means you have a workforce that’s not resisting ongoing change. A little fanning of the flames will keep everyone further improving the processes you designed and implemented during the Customer Service Initiative. Recall that I said, ‘Job Number Two is all about improving Job Number One.’ And with the encouragement and support of the Leadership Team, your staff will come up with lots of ideas they’ll want to try. You’re now beginning to move into a culture of true Integrated Business Management. You’re seeing how everything you do is interdependent. Successful implementation of new ideas will lead to more new ideas. Your job is to keep the ideas and improvements flowing and aligned with your vision.

“I can almost guarantee that, with the education, training, and the successes you’ve had, the manufacturing and supply chain people will want to do more. You need to encourage and support that kind of thinking, enthusiasm, and reasonable risk taking. Start thinking of velocity ratio as the universal test for your priority setting. Now that you’re in control of the business, if a project increases velocity, chances are it’s the right thing to do. If it reduces velocity, it is absolutely the wrong thing to do. Of course, there may be regulatory changes imposed on you that reduce velocity, and you’ll do those—just try to be smart in the way you implement them.”

“Both in planning and operations, I can see this happening already,” said David. “They’re working together to reduce lead times and lot sizes. In fact, while you were here I wanted to mention a suggestion from Janice Hackworth, our Supply Planning Manager, that we invest in a finite scheduler to help load the lines more effectively. What do you think?”

“Good for Janice,” said Roxanne. “Given the number of different products you have and the alternate routings you can use to produce them, a finite scheduler could help. If you’re going to invest, however, I suggest you consider an advanced planner, optimizer, and scheduler. We call it an ‘APOS’ system for short.” Greg spoke up at this point.

“What is it? I’ve heard some people use that acronym.”

“As a first benefit, the advanced planner, optimizer, and scheduler can help level the load in the factory to optimize productivity while still meeting all customer requirements. That’s only a small part of its overall capabilities, such as modeling, but that’s where I suggest you start. As you continue on the journey to full Class A Business Excellence, you’ll absolutely need such a system to sit alongside your ERP system and its data warehouse. Here’s a model of what I’m talking about.” She handed Greg a double-sided card from her case [Figures 17.1 and 17.2].

“You can see how far you’ve come already; now you’re recognizing the need to add more planning support. Next, you’ll need Knowledge Management Systems, most of those shown in the model, to support you on the rest of the journey. These new systems, properly implemented, support significant increases in velocity.”

David replied. “I can see that Roxanne, and thanks. How do I get my supply chain business improvement team started in that direction?”

“The best way is to send them to the public course we offer on that subject. Just one caveat. Before you can fully exploit these more advanced capabilities, you’ll need very high performance from your supply chain processes. That means you’ll need to eliminate much of the supply chain performance variability. Now that you’re at the Capable level, you can utilize your Six Sigma Black and Green Belts to help you in that effort. I suggest that you contact Samantha Williams again to help you as well. She teaches that course for us and already knows many of your people who will be involved.

“And now, a question for you, Alexandra. Tell me how your new product introductions are going and what you’ve done to control your portfolio. I recall that was a major problem for you when we started the Customer Service Initiative.”

“New product introductions are not as bad as they were, but are still an issue. With David’s new flexible process line, we’re less reliant on SKU forecasts, and we’ve gotten much better forecasting bulk requirements. We’re disaggregating the bulk forecasts as required using the latest SKU mix factors. While manufacturing has really improved their responsiveness and reliability, the development process is still out of control. We missed the best launch window for two out of the last three product introductions. It wasn’t a total disaster, but we missed sales opportunities. With one of the products, instead of beating the competition we came in after their launch, which means a fairly significant profit loss over the life-cycle of that product.

“As for the portfolio, we track the number of products we market and sell, but don’t have any overt program to rationalize products. Field Sales tell us that every SKU is important to their ability to sell an entire line of products and represents a source of revenue. They simply won’t tolerate deleting anything from the portfolio. Manufacturing would certainly like for us to trim the portfolio’s size, but we don’t have a good way of determining what to cut, beyond a profitability estimate. But that’s where we get back into the argument that certain low-profit products help Field Sales get their foot in the customers’ doors. That’s about it. By the way, we’ve also been thinking about more system support, starting with a Customer Relationship Management system.”

Roxanne responded: “Thanks, David and Alexandra. You’re right to keep things moving. Remember to keep the Leadership Team involved so that your efforts remain strategic. There are all kinds of exciting opportunities available to you, but much of it may be strategically irrelevant or too advanced for Cosmetics Products at your stage of development. Now back to today’s agenda. The situation is as I suspected. The weak area seems to be Product Management. Please understand I’m not pointing fingers. It is what it is. Greg, we had this conversation, was it eighteen months ago? At that time, we recognized that Product Management was not understood and that the development people were not even using their own development processes effectively.

“Alexandra, do you have any sense of how often your top three competitors miss their introductions?”

“That’s a difficult one. As you know, I visited with Marty at Blackstone last week about our companies’ relationship. Although he didn’t say this directly, there was an underlying message that our competitors rarely miss a launch date and that he was expecting that same performance from us.”

“OK, take that as a benchmark. Greg, you talked about shredding that drawer full of vision, mission, and strategy statements. How much time have you and your executive team spent redefining your vision, mission, and strategic plan given where you are today?”

“That one’s from left field, Roxanne. As you know, we’ve been totally focused on the two milestones. We did a quick review and update to provide general direction for the Customer Service Initiative, but we didn’t give the vision, mission, and strategic plan the full attention they deserve. But wait a minute; I see where this is leading. What I’m thinking, and I need input from David and Alexandra, is that our next competitive priorities should be Managing Products and Services, and Managing the Strategic Planning Process, if I’ve remembered the chapter titles properly.”

Alexandra spoke first. “Every day I come in I look at a poster I framed. It says, ‘If you don’t know where you’re going, any road will do.’ We’re not quite that bad, but I do understand that having a clearly defined strategic direction supported by appropriate tactics would improve our performance. And I certainly agree that improving our product management processes and skills would significantly increase credibility with our customers and increase sales.”

David added, “I have to agree with what Alexandra said, and would add that we’d see about a 5 percent capacity increase if we could get more reliable product development dates.”

Greg nodded his head. “Exactly my view also. So, Roxanne, we’ll check with the other Leadership Team members, but I believe we’ll be agreed on strategic planning and product management as our next areas of competitive priority. And I’ll get the team together to begin a serious review and revitalization of our vision and mission statements. Glad you reminded me of that.”

“Thanks for your perspective, Greg” said Roxanne. “You’ve confirmed for me what I thought were your next competitive priorities. Let me help you with defining more realistically what I see as your next steps. Please understand that you and your team must make the decision on the next milestones. I’m just providing some coaching.

“But I want to recommend a pairing of milestones, rather than a chapter focus. The first is obvious, Capable Product Management, as you said. That will give you the processes and control you need to improve your portfolio management, including adding and removing products. Focusing only on Chapter 5, Managing Products and Services, as you suggested initially, Greg, wouldn’t be effective since that would leave out important dependencies and requirements from the other Checklist chapters.

“The second milestone I’m recommending is Foundation Enabling for Sustainable Improvement [see Figure 6.7].”

Greg interrupted. “Sorry, Roxanne. How does that relate to my strategic planning concerns?”

“Greg, it all comes back to integration and sustainability. Working only on the strategic planning chapter in isolation would miss important dependencies and supporting requirements, just as I pointed out with the Capable Product Management milestone. Foundation Enabling for Sustainable Improvement includes those elements of strategic planning that you need today, and also covers critical dependencies such as the people culture. These two milestones, in my judgment, will raise your customer satisfaction significantly.”

That comment resonated with Greg. “This should be our Customer Satisfaction Initiative—I like that!”

David interrupted, “Are we talking about another fifteen months, Roxanne, with all those resources we needed for the Customer Service Initiative? I don’t know if we can handle that workload given the increased production volumes we’re seeing.”

“I’ve considered that as well. Let’s take a look at the scope of the Foundation Enabling Milestone.” She handed out printed reports from the eList software. As you can see, Foundation Enabling pulls together primarily elements from Chapters 1, 2, and 3; that’s Managing the Strategic Planning Process, Managing and Leading People, and Driving Business Improvement, and includes important linkages to the other chapters. The good news is that you’ve already covered about 25 percent of what’s required when you completed the previous milestones. All milestones build incrementally. You don’t start from scratch. This Foundation Enabling Milestone mostly involves your Leadership Team, along with Human Resources and your business improvement people, who didn’t have a great deal of involvement with the earlier milestones. Foundation Enabling will provide them the opportunity to build a foundation for future company initiatives. That’s why we call it a foundation milestone. As it happens, the work on this milestone also provides a substantial contribution, about 50 percent, to the Capable Product Management Milestone. With a couple of cross-team members, the Product Management Team will find it can focus on developing those product management processes and skills Alexandra referred to. Together, these two milestones and ongoing improvement of what you’ve already accomplished will also take you three-quarters of the way to completing the Advanced Integrated Business Management Milestone. That’s the incremental nature of these milestones. In terms of time to complete these two milestones, I would estimate twelve months. Now a final reminder, everything you work on is integrated, so make sure you have strong cross-functional linkages within and across the teams.

“And don’t forget to study your competition and your industry to learn how they stack up on these processes and measures. You need to get serious about competitor analysis and benchmarking, and target consistently to be in the upper quartile of competitors in your industry.

As the meeting drew to a close, Greg knew he needed to involve the rest of his Leadership Team. In particular, he wanted to look at the milestones in more detail with Zachary and Gabriella.

At home that evening, Greg reviewed his day with Penny. By listening and asking a few pointed questions, she helped him develop his thoughts into a firm plan of action.

Greg arranged the next Leadership Team meeting to be extended by two hours to introduce his ideas and proposed action plans for moving forward. Greg needed his team’s input to reach a decision. After considerable discussion, they concluded that they needed to get on with the Customer Satisfaction Initiative with its Capable Product Management and Foundation Enabling milestones, as Roxanne had suggested. Their objective was to maintain their improvement momentum toward upper quartile performance and prevent their competitors from setting the Cosmetics Products agenda.

Sara Miles, VP Finance, told them that although it sounded financially justifiable to her, she needed a little time to examine the financial justification. David took joint responsibility with Sara for developing the business case. He was confident, because of the foundation already established, that the investment would be much less than with the Customer Service Initiative. Greg agreed to put the topic on their Leadership Team staff meeting agenda in three weeks and offered his team Roxanne’s coaching and mentoring services in the meantime. He knew that they had to return to the Proven Path that served them well during their first initiative [see Figure 10.3]. His team took advantage of the offer and spent several days with Roxanne developing the Proven Path Leadership phase elements and critiquing their ideas and plans for moving ahead. Day by day, support for the Customer Satisfaction Initiative was growing throughout Cosmetics Products, and also with Susan, Amalgamated’s CEO, through Greg’s frequent progress reports.

With great anticipation Greg joined his Leadership Team three weeks later for his scheduled staff meeting. Alexandra had requested to lead the first agenda item, although vague about the topic. She brought Sharon with her for the presentation.

“Sorry for being so demanding about being first, but Sharon and I have some important and relevant news. These are preliminary findings; we’ll need another month to confirm what we are learning. Nevertheless, we’ve managed to find out a bit more about our competitors’ customer service performance. First, we’ve learned that customer service provided by two of our key competitors rarely falls below 98 percent as measured by percent of order-line items delivered On-Time-in-Full to first promise [OTIF-P]. And we believe that for the past several weeks running, they’ve been very near 100 percent.”

“That’s not so far from 95 percent, is it?” asked Greg.

“I wish,” replied Alexandra. “The scaling between customer service 50 percent and customer service 100 percent is exponential, not linear. They must be doing some things better than us.”

The executive team was stunned by the news. They had convinced themselves that their 95 percent performance to first promise was a benchmark for their industry.

“And there’s worse news. The order lead time for their products varies between two and four days for A-Items, compared with five to seven days for ours. In combination, that’s not a pretty picture. But cap that news off with the news that those competitors rarely miss a promised new product launch date.”

“Now I’m confused. If that’s the case, why have our sales been increasing?” asked Sara.

“First, we have our products on the shelves much more often than in the past so that consumers can find them. On top of that, our customers tell us that their customers—the consumers—like our products, and our approach to promotions and trade support. They also tell us that our brand name and reputation for good value are keeping us in the game.” There was a depressing silence before Greg broke in.

“I’m glad you gave us this information, Alexandra. We could have basked in our recent successes, but you’ve provided even more incentive to get us moving again.”

As David expected, the business case for the new initiative was solid and had Sara’s complete support. With that news, the Leadership Team made two decisions: they would launch the Customer Satisfaction Initiative, and they also committed to complete the entire journey to Class A Business Excellence with its required upper quartile performance. Greg would once again be the Initiative Champion and Peter Bernard, the Initiative Coordinator. Sharon Rogers, Director of Marketing and Product Coordinator, was assigned to the role of Capable Product Management Milestone leader, with Alexandra as the Milestone Champion. Gabriella Jemison, VP of Quality and Regulatory, Heath, Safety, and the Environment would be Champion for the Foundation Enabling for Sustainable Improvement Milestone, with Peter Bernard again doing double duty as the Milestone Leader.

Over the next four weeks, milestone and process design teams were commissioned, and initiative and design team plans were developed and approved. The Leadership Team completed the Leadership Phase and officially launched the Customer Satisfaction Initiative. Launching this initiative was less of a challenge than the first because of the extensive education and learning that occurred during the Customer Service Initiative. The Cosmetics Products organization now had a common language and level of Business Excellence understanding that was accelerating their progress.

True to his word, while the two new milestones proceeded in parallel, Greg arranged for a full week off-site strategy workshop for his team. Greg asked Peter Bertrand to attend this important event, which would be facilitated by Roxanne and Tom. Greg’s objective was to develop the clearest and most relevant Cosmetics Products vision, mission, and strategy statements in the history of their business. Objectives for the week would also include developing at least a rough draft of their customer-focused strategic business objectives and a 10-year strategic plan.

Roxanne suggested some simple definitions to help their communications and get the team started:

“Don’t confuse vision and mission. That’s a common mistake,” Roxanne added. “Vision is a conceptually created picture of the future; Mission relates to today and how you begin moving toward that stated future.”

“You know,” exclaimed Greg. “I’ve been in executive teams for years and used many of these terms without really examining their meanings.”

“It really is helpful to see this list. Having alignment on the meaning of these terms could have saved me lots of arguments in the past.” David added. “Specifically, I’ve been confusing Vision and Mission. We should rewrite these descriptions using familiar Cosmetics Products terminology, but this gives us a great start.” They agreed to devote a portion of their ongoing team meetings to further develop the definitions.

Roxanne was glad she started the session with those definitions. Building on the them, she began to lead the team through the strategic planning workshop, a key element of accomplishing the enabling milestone. Over the next few months, the Leadership Team, as a milestone subteam, would focus on addressing, designing, and documenting milestone elements from the strategic planning chapter. Other subteams would ensure all the other enabling milestone elements across the Checklist chapters were covered. Peter would ensure integration and cross-fertilization of ideas and alignment on decisions that affected both teams.

The Leadership Team made significant progress during the workshop and agreed to meet two afternoons each week over the next few months to refine the definitions, to complete their first ten-year strategic plan, and to finalize the more detailed and time-structured three-year business plan. The strategic plan predicted and supported significant growth. Building on early signs of rapid growth, Cosmetics Products strategy had them becoming market leader in their chosen markets. Their aggregate strategic plans were built into their Enterprise Sales and Operations Planning Tool as product family plans (product category plans in the case of Cosmetics Products) so that through the monthly Integrated Business Management process, they could keep the business “on strategy.”

Zachary led a subteam to develop the Managing and Leading People chapter requirements of the Foundation Enabling Milestone while Gabriella led a subteam focused on the Driving Business Improvement requirements of the milestone. For both Zachary and Gabriella, this was the first time they had really come out of their technical specialist roles to make broader contributions to improving entire business. They found the opportunity energizing, a change noticed by many others. Peter remained in close touch with all the teams to ensure seamless integration of the developing business processes.

The Product Management Milestone team requested refresher education on the role and importance of product management in driving business success. Sharon Rogers, Marketing Director and Product Coordinator, attended the education session and all workshops to demonstrate her leadership and support of the needed changes. Prior to the Customer Service Initiative, Product Management had meant managing new product development and introductions. Alexandra and Sharon recognized the limited scope of that definition and the need for creative capabilities suited to a more contemporary definition of product management [Figure 17.3].

Alexandra and Sharon also saw advantage to them of changing the organization relationships [Figure 17.4], and completed the necessary product management organization and process changes within a few months. They now had in place an executive business filter that had already improved the new product proposal selection and prioritization process. This led to their developing a New Product Master Plan, a single list of approved projects that were budgeted and resourced.

Product development processes also needed attention in support of the new Initiative. Using his extensive project management experience and skills, Peter contributed to process improvements and helped streamline, standardize and strengthen product development and launch processes. Cosmetics Products had developed and documented a product development and launch Stage and Gate process, based on Bob Cooper’s work, long ago. However, the launch process, although complete and well developed, was never fully implemented. Peter observed that Gates were defined but were, in effect, always open instead of locked. There were no documented Gate criteria templates, and the wrong people were making Gate decisions. He also observed that Stages were not supported by stage planning templates; each project leader was creating a unique input-Gantt for each project. There was no consistency between projects, and the input-Gantt charts were not managed. Not surprisingly, it was impossible to manage resource allocation properly, which had adverse consequences on the entire supply chain. Emergency requests for test batch production were frequent and resulted in either product launch delays or customer service issues caused by unplanned changeovers to accommodate the requests. The team concluded that poor project and resource planning accounted for most of the delayed introductions.

With occasional coaching from Tom, Peter introduced Cosmetics Products to the rigors of a formally implemented Stage and Gate process. He reminded everyone that, without standardization, there could be no control; and without control, there could be no improvement [see Figure 7.1]. There was the usual pushback from those who saw a formal process as creativity limiting. The team realized that the current procedures unnecessarily required all new products to follow the same path. They developed appropriate multiple paths based on development complexity of the new product. Most development personnel supported this launch model improvement. Those who still objected to the “stifling of their creativity,” as they put it, were told privately that Cosmetics Products could no longer afford the negative consequences of their unbridled creativity.

The team introduced a new measure, called “Milestone Adherence,” to track the percentage of planned milestones actually achieved each month. More than anything else, this new measure would drive the success of the new launch model.

The appointed product managers attended education, training, and workshops to understand their new roles and to develop the formal processes to be followed. Most were appreciative of the trust and responsibility they were being given to help design the future of the brands and markets they managed.

In parallel with this activity, Sharon and Charlie were developing new working relationships with Sales and reinforcing the links to Managing Demand.

It was then time to provide necessary education on portfolio and product life-cycle management concepts as well as to develop a formal promotions management process. To develop the supporting business processes, the team leaned heavily on Tom for coaching. It was during this period that the new relationships between Product Management and Sales were most severely tested. On several occasions, Alexandra was called in to referee heated discussions between the groups, but through Sharon’s determination to balance business needs with perceived, but not proven, customer needs for old, low-volume and low-margin products, the factions came to agreement. Within nine months the number of SKUs had been reduced by 40 percent, with no significant impact on customer satisfaction.

Manufacturing costs improved as the number of items decreased, and margins were further increased as lower margin products were deleted from the catalog. Tom observed that this was usually the case, although there are a few occasions when a low-margin product is actually justified to complete a product line for a key customer, or to meet the needs of a key customer request for a unique product or packaging presentation. Alexandra didn’t want to close the door on this opportunity but knew that Cosmetics Products couldn’t maintain an inventory or routinely manufacture these one-off items. They referred to these products as “specials”—special products, special packs, or special presentations. Specials were quoted with longer lead times and higher prices to offset the higher costs and still meet targeted profit margins. With the improved levels of customer service, Cosmetics Products customers were happy with the flexibility and responsiveness offered.

Alexandra’s initiative to launch a quarterly Customer Satisfaction Survey process with a recognized Customer Satisfaction Index authority was paying dividends. She received the first report, which showed that, for their industry, a CSI Index of 75 percent to 85 percent was normal. Cosmetics Products, however, received a low score of 58 percent. There was continuing good news, however, in that consumers continued to rate the quality and value of their products higher, at nearly 75 percent satisfaction. Their customer service, still not competitive enough, drove their overall poor showing. Copies of the detailed report were distributed to all product managers to help them appreciate the challenges ahead.

In March, after 10 months of effort on the Customer Satisfaction Initiative, David asked Roxanne for a preassessment to check progress and identify any remaining gaps. Roxanne arranged for Tom to help her with the preassessment, confident of Cosmetics Products readiness because of her team’s ongoing coaching involvement. She reminded David that she would be looking hard for signs of improved customer satisfaction, the focus of this second initiative, and expected to hear good news on that front.

She was not disappointed. Cosmetics Products had demonstrated only two consecutive months of performance at the required level for a few measures, but the trends were all positive; and March month-to-date results were all above minimum requirements. Preassessment gaps identified by Roxanne and Tom were assigned to the teams, and the Steering Committee agreed to a late April final assessment date for the Consumer Satisfaction Initiative milestones. Roxanne would assess all aspects of all four milestones to date to confirm that improvement activities were delivering continuous improvement to the bottom line. She anticipated that scores for the Customer Service Initiative elements would have climbed from 3.0 and 3.5 to as high as 4.0 in many cases.

Following the assessment, Roxanne and her Effective Management assessment team complimented Cosmetics Products on one of the best assessments they had conducted. The milestone teams had been well organized, open, and honest, and had produced excellent documentation, evidence, and business results. David acknowledged that some of the high scores were the result of the initiative, creativity, and persistence of the people on the business process teams. Roxanne had seen for herself that the team members were obviously proud of the work they shared during the assessment and were beginning to demonstrate characteristics of self-directed, high-performance teams. They understood the vision, mission, values, and strategic objectives and didn’t need to wait for managers to tell them what and how to improve. The bottom line benefits were significant. Customer satisfaction as measured by the outside agency was now up to 75 percent; market share had grown six points, and profit margins had improved beyond their expectations.

Roxanne cornered Greg during the award celebration held in the headquarters auditorium two weeks after the assessment.

“So what’s next, Greg?”

“Roxanne, I’ve learned my lesson about not sitting on my laurels! First item on our Leadership Team agenda in two weeks is determining our latest competitive priority, and our next initiative and milestones. Actually, that agenda item will follow a review of any safety and people issues, which now always headline our meetings. Recognizing the strategic importance of our people is one of the key values we established recently.”

At home that evening, Penny listened as Greg recounted the events leading up to certification of two more milestones and his thinking about what was next. This time the celebration continued; Penny had made a reservation for a quiet celebration over dinner in their favorite local restaurant.

Work was again fun for Greg, but he knew there was much more to do. After all, his Customer Satisfaction Index left another 25 percent as room for improvement!