Most people think standard operating procedures are a strait jacket that limits

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Most people think standard operating procedures are a strait jacket that limits their flexibility. Yet in our increasingly complex world of work, with so many possible decisions and steps, clever use of standards can liberate. They can actually make it easier to tailor customer experiences at low cost. Consider how standards are helping the Cleveland Clinic, rated one of the top hospitals in the United States. As Chief Marketing Officer Paul Matsen told me, “We use enterprise-wide standards. There is one marketing communications team, and we work across all our institutes, such as heart and vascular, or cancer. Having a single enterprise brand and image creates organizational challenges because it seems as though it constricts autonomy. But it actually creates freedom within a structure. For example, we are building a development platform for the iPad, and defining how it will interact with our electronic medical record system. When we resolve that for this first application, then our people will be able to create content for other applications using the same standard platform. Once you set up the standards and platforms, you can do more, and you can do it well.” The Cleveland Clinic cleverly uses standards to deliver operational consistency, reliability, and low cost. Yet at the same time they use these standards as a springboard for creating unique solutions for each customer based on a deep understanding of their needs. (I call this understanding and tailoring “customer intimacy”). The result is a powerful combination that fulfills two customer value propositions at the same time. Another example at Cleveland Clinic is in search engine marketing. Paul Matsen: “We’ve seen that when patients are diagnosed with a disease, they’re increasingly going to the web to research care, diagnosis, treatments and doctors. We’ve reshaped our marketing mix to reflect this new patient behavior. We spend half our media dollars to reach consumers searching for health information, and we have built reliable and useful experiences for those who come to our site. We partnered with institute leaders to build a few patient pathways, and we’ve expanded to over 100. It’s a very efficient model for patient access. Building on our standard approach, we were able to scale and replicate easily.” Twenty years ago my friends Michael Treacy and Fred Wiersema asserted in their HBR article “Customer Intimacy and other Value Disciplines” that leading companies succeed by excelling at one of three “value disciplines” — operational excellence, customer intimacy or product leadership — while meeting industry standards in the other two. They predicted that future winners would need to master two of these value disciplines. And the smart use of standards, as at the Cleveland Clinic, is part of the answer. I see more and more companies mastering “operating models” — that is, their culture, business processes, management systems, and computer platforms — that use standard work to drive operational excellence and also provide a platform for tailoring customer solutions. For example, in a previous post, I described how Tesco made major strides in its supply chain management in the 1990s by applying standard process disciplines. It then added customer insights it gained from its Clubcard loyalty program and online shopping data to those more capable supply chain processes to tailor customer offerings in local stores and online. The traditional view that complying with standards is part of a rigid “command and control” management system should be replaced with a new model: clever application of standard work allows you to have both efficiency and the flexibility to offer unique solutions to each customer. In my next post I’ll delve more deeply into different kinds of standards, from checklists for safety to the standard work that forms the basis for continuous improvement.

1. What does it mean for “The Cleveland Clinic cleverly uses standards to deliver operational consistency, reliability, and low cost”? 2. In the 3rd paragraph, there’s a statement “The result is a powerful combination that fulfills two customer value propositions at the same time”. What are the two customer value propositions? How did Cleveland Clinic fulfill those two customer value proposition through enterprise-wide standards? 3. Why the smart use of standards is part of the answer to satisfy the three “value disciplines”: operational excellence, customer intimacy, and product leadership? 4. List out some ways to standardize the operating procedures, and some other successful examples in business.

Explanation / Answer

1. Since the Cleveland Clinic uses enterprise-wide standards which is applicable in all the institutes with a single brand name, it becomes easier for the hospital to provide satisfactory services to the customers at low cost. Thus, for this smart move of the Clinic, it can be said that it cleverly uses standards for providing operational efficiency.

2. The two customer value propositions are: delivering high-quality service to the customers and low cost of service. The enterprise-wide standards are very much beneficial for the Cleveland Clinic in fulfilling the two customer value propositions as ones the standards of operations are established they are further helpful in resolving other problems with a more smart approach thereby boosting customer intimacy.

3. Since smart use of enterprise-wide standards by Cleveland Clinic is an example of achieving operational efficiency and customer intimacy it can hence be proved that achieving any of the three value disciplines( i.e operational excellence, customer intimacy and product leadership) is essential for any company for their future success.

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