Tag Archives: value improvement

Saving £m’s, charging £???

or You Are The Ref ! – The Legal version

It’s Thursday 23rd September and you are called by a client to provide a way out of a sticky situation. The client, a large northern based football team (soccer franchise, anyone?), has only a few weeks to repay its loans before they are called in by their bank.

Currently, the football club is up for sale for a figure reported to be at least £420m and prospective buyers may be in the wings. However if they wait till the banks call the loans in, they could potentially buy the football club for less than the price of its outstanding loans, which are reportedly £280m, a saving it would appear of at least £140m for the buyer.

The dilemma is that if the club debt is called in and the banks technically own the football club, the club could be deemed to be in administration and the rules of the sport appear to determine that the club would be deducted 9 points.

If the points are deducted the football club could find it difficult to retain the services of some of it’s key assets, the players, and could even be staring at relegation and a drop in its revenue, which at the moment can at least service the loans.

Other clubs which have stepped down in the league structure have found the revenue drop coupled with large fixed overheads and player salaries ruinous.  

Should the loans be called in on the 15th October, you have been asked to provide a legal defence, to prevent the application of the sports “administration” rules and prevent the deduction of the 9 points.

1) How do you charge (billing structure) for your advice? (bearing in mind you could find the answer in an hour, three hours or three weeks!)

2) How much do you charge? ( if your advice prevents the 9 point deduction it could head off the spectre of relegation and could protect revenue worth several £10’s of millions of pounds)

Any ideas, then drop a comment in the box below, we’d love to hear how you’d value the legal advice.

Never happen, you say?http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/09/why_rbs_looks_set_to_own_liver.html it might do!

(Ask about Lean Principle #1 if you’re wondering what a legal pricing question is doing on a lean blog. )

Advertisements

Continuous Improvement in Legal firms

“Doing a better job, in a shorter time, makes customers more satisfied. The more satisfied a customer is, the more they will recommend you to others and be prepared to look to you again for future solutions”

If you find the statement above agreeable and yet also believe that “Value Billing” or other alternative fee arrangements in the legal (or other professional services) sector could mean that revenues and profits will be reduced, then one solution that has been used in the States could be of interest.

The Association of Corporate Counsel has noted that the work conducted by one company in the article has put it “five years ahead of every other AmLaw 200” and led to them being able to cut the cost of providing services by up to 50%.

The article, which is entitled, Continuous Improvement”  (in legal firms)

click the article title to access the pdf, or as we knew it internally here “Improving Legal Firm Efficiency: 5 Management Principles”, was written by ourselves and published in the September 2010 edition of the Law Business Review magazine and it explores the dramatic results of applying Lean Thinking in a law firm.

Note: Law Business Review don’t have a copy of the magazine available on the web, this is the only place you can get a free copy of this artice from the magazine. If you want a copy but have problems downloading it then contact info@resqmr.co.uk requesting a copy and we’ll send it on.

If you would like to explore how this form of Continuous Improvement can work in your legal (or other professional services) organisation then drop us a line info@resqmr.co.uk

The website for the magazine, who kindly published our insight, can be found at LawBusinessReview.co.uk and it is published by LexisNexis and covers a wide range of business issues and typically contains 6 core areas; Business School, Client Focus, Skill Development, International Business, Future Knowledge and Risk Management.

Other sources we used for this research include:

www.leanlaw.net by Mark Jackson

www.troubleahead.co.uk by Michael Scutt

Tip: Use the buttons below to re-tweet, email or print out this blog.

 

About the Author;

Mark Greenhouse has been working on the application of Lean management in Legal and design led Manufacturing companies for the past 5 years. His own Lean journey started back in 1988 when he started study of Production Engineering. He’s applied lean in many organisation types, finance, call centres, banking, FMCG etc. Mark also provides lectures on operational management at Leeds University Business School.

Skinny view on “Lean Education”

Can lean techniques be used in an education environment?

Well why not, lean has helped improved service and manufacturing industries and is now being used in the cognitive environments, so why not to improve schools and colleges?

This article on Lean Education starts to consider how lean might be applied and okay it references the tools of JIT and TQM as being “lean”; lean isn’t the set of tools or techniques, it is really a set of principles but that aside, it is asking the question “can we improve our service to our customers?” one of the key questions to be answered under the first principle of lean and valid for all providers of a solutions regardless of sector.

However at a time when many lean practitioners are making the 7 Wastes up to 8, with the addition of the Waste of Human Potential, why can’t the same techniques be taken into education and improve the service delivered?

Could we even teach lean principles before the ideas of individual targets, batching, queuing, inventories etc take over and morph into economic batch sizes, overhead absorption rates, variance reports and the raft of information which often blinds us to the real improvements that can be made in the organisations we go on to work for?

 (most economic batch size? it’s the batch size you can sell quickly, or have even already sold that is most economic, if it isn’t you’re wasting your efforts elsewhere)

If these guys here at Lean Education are to be believed then Lean is already delivering impressive, quantified results;

  • improved academic results
  • time for planning and teaching increased
  • budgets managed withing constraints

If anyone has tried this in the UK, let us know.

Mark

www.resqmr.co.uk

www.twitter.com/theleanmanager

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to Ma.gnoliaAdd to TechnoratiAdd to FurlAdd to Newsvine

BOGOF – it’s just not lean marketing

According to this story in The Times Tesco the UK grocery retailer is to drop Buy One Get One Free offers on food. Following Asda, who dropped these offers a while back and Sainsburys who have also announced they will reduce the number of offers.

Food waste in the UK costs the average household £420 and the average Britain throws away 3* their body weight each year in food.

So what does this have to do with Lean Marketing?

well the insights are in the pdf booklet on the 7 Hidden Wastes of Marketing, to find it, go to this page on Lean Marketing.   You’ll need to register on the site to get access to the papers, that’s just so we can see how popular it is, if you have any problems then please e-mail us and we’ll send you a copy of the paper. (info@resqmr.co.uk)

As a taster though (no pun intended) as to why BOGOF isn’t lean.

When you run BOGOF, you anticipate extra demand, sometimes 16* as much as your normal volume.

So how do you cope with this? you convert more of your cash to raw materials, to build the extra demand, next you might run production lines for longer or bring in casual staff, incurring overtime or additional labour costs, then you might build up a buffer of inventory stock for the start of the promotion, incurring extra storage costs becasue you can’t be sure where demand will go up first and by how much.

and for the pleasure of all this you have received half the normal revenue per unit sold, you didn’t assume that the supermarkets pay, did you?

All in all your costs have gone up and revenue per unit down, never mind you can console yourself that the consumer got Value (they paid less) only if the figures above for waste are to be believed did the consumer derive value or just guilt from throwing good products away?

and what happens when the promotion ends? yep you’ve guessed it your demand drops normally well below your normal volume, so now you have staff with nothing to do – except you have accountants who want the machines run, the people kept busy and the overheads absorbed, so you make to stock………..

and to clear the stock your sales and marketing team might decide to run a BOGOF with another outlet………..

and then your brand looks as though it is permanently discounted and the marketing team may decide they need to spend money on campaigns to address this in the marketplace and to re-establish the brand…….

How many brands do you recognise as always being on promotion somewhere??

Thanks for reading

Mark    http://www.resqmr.co.uk

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to Ma.gnoliaAdd to TechnoratiAdd to FurlAdd to Newsvine

Do you REALLY listen?

Do you listen to the Voice of Your Customers? I mean really listen, not just to what they say but what they do and how it affects your business?

Could listening to the Voice Of the Customer (VOC) have saved a UK bank?

Back in autumn 2008, we highlighted the story of Norwich Union (Aviva, if you watch the adverts or are based anywhere outside the UK) who had just started a car insurance marketing campaign which we felt was a really good example of Lean Marketing.

WHAT WAS IT?

NU (Norwich Union) offered to give its potential customers a quote for car insurance and at the same time it would give prices from its competitors (using web technology) even if they were cheaper.

WHY?

We hypothesised that NU was testing similar work to that we talk about in Lean Marketing, in which we talk of Customer Value & Loyalty being built on three core foundations;

  1. Features & Benefits – what is it about your product/service that are the hygiene factors? what sets your product/service apart from the competitors?
  2. Brand – what does the brand say about how you’ll treat me as a customer? in these credit-crunch days, how much confidence do I have you’ll be here next year?
  3. Price – often “quoted” as the single reason customers buy from a company however it’s rarely the biggest reason!! (try testing people by asking what their competitors charge – if it’s that important surely they’d know?)

These foundations impact on the value customers place on the total package they receive and on their loyalty, the exact nature of the impact varies, depending on the industry. However we believe NU was saying if you value our Features and Benefits, trust our Brand then our Price is less important and we don’t have to be the cheapest in the market.

I can hear almost what you saying “but they’ll have lost potential customers”.

Almost certainly they have; there are consumers out there who buy the cheapest, but exactly what have NU lost?

Potential customers who were basing their purchase solely on price, so what would happen at the renewal of their insurance? they’d look for the cheapest supplier again. So NU would have invested (marketing & sales) resources in acquiring a customer, incurred costs setting up their details (operational resources), sending out policy document and packs (distribution resources) only to have that customer looking to leave after one year. This type of customer is probably less likely to have bought anything else from NU, the price was their largest consideration.

Contrast this with the customers they may get on their book with Lean Marketing? they are not so readily driven by price, these customers are also placing more value on the Features & Benefits and Brand offered by NU. So again a hypothesis, these customers are probably more likely to buy other products (cross sales) and more likely to stay with the company when it comes to renewal.

Result: the organisation removes one of the “7 Hidden Wastes of Marketing” – the waste of attracting customers who only buy one product once based purely on price! There is always someone else waiting with bigger and deeper pockets ready to compete on price.

Does it work?

Well the advert appeared to run for a couple of months, in Autumn 2008 and then stopped, now it is back and running again, a classic direct marketing test you could say.

We are summarising that the fact that it is back and running is because it worked;

  1. customers acquired by Norwich Union have proved to be more robust, less likely to cancel!
  2. more likely to purchase other Norwich Union products.

we can’t say that they are more likely to renew, the advert appears to have only been running for 7 months so far, we’ll know if this strategy stays past Oct/Nov later this year.

You may have also noticed that the UK price comparison (moneysupermarket, gocompare, confused.com etc) websites have started introducing new features that compare the product features and allow for feedback on customer experience (of the brand) – have they too realised that not everyone buys on price alone?

So could this help anyone else? even have saved a UK Bank?

Back in in 2006/07 HBOS (now part of Lloyds Banking Group) implemented a new mortgage strategy, prior to whch they commanded 21% of the new mortgage market. The strategy which was simple and not too dissimilar to NU’s, was that HBOS would no longer offer potential and existing customers different mortgages @ different prices.  There would be one group of prices and they would be priced to maintain a reasonable margin for the bank.

(In the UK most lenders had a policy of offering new customers introductory rates to entice them in these would rise at the end of a fixed period – though you could move and re-mortgage as a new customer rate with another lender.)

So what was the result? The HBOS share of the new mortgage market dropped 8% from 21% – or a 62% reduction – in a six month period. Other lenders retained their policy of offering great deals to new customers. HBOS on the other hand was offering not so great deals to new customers but offering better deals to its’ own customers coming to the end of their existing deal – to try and improve customer retention.

What were potential and new customers telling HBOS? over half (62%) of the customers HBOS could have expected to sell to, went elsewhere. Was it that

  1. The features and benefits of the mortgage weren’t compelling enough over those of it’s rivals?
  2. The brand wasn’t strong enough to convince these people to come to the company?
  3. Price became the primary factor in the decision making process – effectively customers saying “We’re that strapped for cash we need to watch every penny?”

This last one I find interesting – was it the first warning sign of the economic health of HBOS customers or even the housing market and economy in general?

It certainly should have highlighted that 62% of the customers on the existing mortgage book might not be interested in other products (cross-selling), they might only have bought on price alone. Or highlighted that the branding work and the features and benefits of the HBOS mortgages were not regarded as positively different enough by over half the market – the same conclusion could be drawn about the competitors. Remember these customers came to HBOS prior to their pricing changes.

Did HBOS listen? We’ve no idea, the only articles in the public domain talk of corrective pricing strategies that reversed the previous strategy and boosted their share of new mortgages back up to the 15-20% band.

Maybe HBOS did consider what their customers (existing and potential) were telling them, maybe they changed their features and benefits, maybe they changed their branding work, we’ve no evidence, they never said, maybe they considered all this and dismissed it.

Maybe they considered the shareholder customers above those who bought the product and services. (The share price dropped when HBOS admitted that their share of the mortgage market had dropped.)

If you realised that 62% of your market were

  • in financial difficulties
  • couldn’t discern product differences between providers
  • didn’t believe your brand offered a different experience?

What would you do differently?Listen, ask more questions, change what you do, stay doing the same, get out (let someone esle take the risk)…..

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to Ma.gnoliaAdd to TechnoratiAdd to FurlAdd to Newsvine

Is President Obama poised to go lean?

I was intrigued as to what President Obama would make his priorities in his first address to the US population so watched his first weekly video address on the BBC website.

Towards the end, just on 4 mins, he mentions that he is looking to root out waste & inefficiency in government.

So thinking that maybe Obama has come across lean I googled “Obama Lean” and found two key stories;

  • He has appointed a Chief Performance Officer to the White House staff, Nancy Killefer an appointee from McKinsey and the story is covered here and covers what her role entails.
  • Given his appointment to the post of the President on Tuesday he found time in the week before to visit a company, Cardinal Fasteners who have used lean techniques since 1998 and used it to turn to new technologies in the last two years.

Visit the Cardinal Fasteners website to see how they promote lean thinking.   

So what is the evidence as to whether Obama might be a fan of Lean?

  • He’s appointed a Chief Performance Officer,
  • He talks of reducing waste and inefficency, not just inefficiency or becoming more productive,
  • He visited and championed a company who have used lean techniques, in the week he took on the most powerful office.

Okay it might not seem much and he hasn’t actually used the word lean or lean thinking but we’ll keep an eye and ear open for any other stories we see about this, it may help promote lean over here too.

Visit www.resqmr.co.uk for details of how lean can be applied across many functions in organisations including; FREE papers and guides on LEAN in marketing, sales, accounting, HR etc.

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to Ma.gnoliaAdd to TechnoratiAdd to FurlAdd to Newsvine

Lean improves Cash Flow by 38%

In these economic times where “Cash is King”, lean thinking provides a set of principles which can be used to dramatically improve cash flow.

The example we’ve come across here shows how lean thinking can be used to

  • improve cash flow
  • improve customer service
  • improve organisations in the service or knowledge sectors

and proves you don’t even need to resort to slashing stock levels, especially if you don’t have any!

The business in question is Stiles Associates LLC, an executive recruitment agency and the story was mentioned in Lean Directions, using lean thinking Stiles Associates achieved the following results;

  1. 29% reduction in time taken to fill a vacancy! filling in under 90 days
  2. 38% reduction in debtor days, which had a massive impact on cash flow.

They achieved this by conducting

  1. value stream mapping (including their customers)
  2. kaizen events 
  3. daily meetings to highlight completed, outstanding and on-going tasks
  4. visual management systems.

Goes to show that the promises of improved business processes, better cash flow can be achieved through lean and in sectors other than operations or manufacturing.

If you want to read how lean can be applied in marketing, sales or accounting then please visit our website www.resqmr.co.uk to see how we approach these areas as well as the traditional manufacturing/operations areas.

Or contact us at info@resqmr.co.uk , Mark.

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to Ma.gnoliaAdd to TechnoratiAdd to FurlAdd to Newsvine