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MANAGING BOOKS

How a traffic light can change your business for the better Add to ...

Scaling Up Excellence

By Robert Sutton and Huggy Rao

(Random House Canada, 346 pages, $34)

To improve the customer experience, Sberbank, the largest commercial bank in Russia and Eastern Europe, established 40 branches where new ideas could emerge from staff trained in process innovation. One idea, to deal with the load on tellers, was to have managers activate a green, yellow or red light on the tellers’ computer screens, according to how busy the branch was. If the light was green, lines were short and the tellers could cross-sell other services the client might like. As the branch became busier, a yellow light would signal them to hurry customers a bit and get less involved in cross-selling. A red light meant things were too frantic to cross-sell and that tellers should avoid answering questions at length, instead handing out brochures.

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That simple technique reduced the burden on tellers and, just as important, the tension between managers and tellers, because the previous mixed messages on how to handle customers were clarified. A week or so after the innovation was tried out, it was refined in 15 more branches, and within two months it cascaded out to several thousand.

The traffic light idea is an example of scaling up excellence – taking a good idea, and getting it used throughout an enterprise. Often, that vital effort is fraught with complications, if not totally bungled, as executives run into what Stanford University professors Robert Sutton and Huggy Rao call “the problem of more.”

Their interest emerged from working with executives at a management education program on customer-focused innovation. Executives could always point to pockets in their organization where employees were doing a great job at uncovering and meeting customer needs. But they were frustrated by the difficulty of spreading that excellence to more people and more places.

The professors add a caution, however: It’s not just a case of replicating good efforts, or as they phrase it, “repeating the same old magic again and again.” The goal should be more and better – improving all the time.

Borrowing a military metaphor, they stress that scaling excellence is a ground war of many, close-at-hand battles, not an air war in which a few bombs are dropped, perhaps off target.

“Certainly, there are junctures in every scaling effort where it is wise to choose the easier path or secure a quick victory. Yet as we dug into case after case, and study after study, we saw that every allegedly easy and speedy scaling success turned out to be one we just hadn’t understood very well. Scaling requires grinding it out, and pressing each person, team, group, division or organization to make one small change after another in what they believe, feel, or do,” the academics write in Scaling Up Excellence.

It’s crucial to choose between what they call “catholicism” and “buddhism.” Catholicism is their term for replicating the same pattern, as precisely as you can, throughout your enterprise. Buddhism allows for variation to fit local conditions.

Home Depot took the former path in China, and flopped. The retailer’s do-it-yourself approach clashed with the “do-it-for-me” mentality they encountered. With labour cheap in China, those who could afford to shop at Home Depot could also afford to hire people to do the work. Rigidity and ignorance of the market led to failure.

But if that points to the virtues of buddhism, too much variation can dilute brand consistency and companies must guard against that. The authors note that while Four Seasons Hotels tries to be a cultural chameleon, adapting to different countries, customers know that anywhere in the world,they will get 24-hour service, a custom-made mattress, and a marble bathroom. The company actually specifies 270 “service cultural standards” that are expected to be met by every hotel.

Kaiser Permanente, the largest integrated health-care system in the United States, struck a balance between buddhism and catholicism by laying out a few crucial constraints for each region as it implemented a new health record system. They dubbed these non-negotiables “guardrails,” while otherwise allowing lots of local leeway.

For example, each region had to call the new system KP Health Connect, which broke with the pattern of wide variation on names. A second guardrail was “interoperability” – no modifications were allowed that hampered the company’s ability to maintain a single, integrated system. A common data model was also mandatory. “This ‘guardrail’ strategy eliminated many costly, time-consuming, and destructive aspects of local customization ...,” the authors wrote. “As KP regional leaders discovered, it was easier, faster, and cheaper to initiate solutions that work elsewhere than to invent something from scratch every time.”

Scaling up can be complicated, and the authors don’t make it any easier. The book is littered with principles, mantras and highlighted approaches, each with a series of lessons and ample research material from their work. So don’t expect easy answers. But they will certainly give you a sense of the terrain, where you can go astray, and how to keep the odds on your side.

POSTSCRIPT

Adam Bryant, author of The New York Times’ popular Corner Office column, draws together lessons on innovation from the many chief executive officers he has interviewed in Quick and Nimble (Times Books, 264 pages, $30).

Consultants Karen Martin and Mike Osterling explain how to visualize work and align leadership in Value Stream Mapping (McGraw-Hill, 195 pages, $41.95).

Guelph, Ont., entrepreneur Fred Dawkins offers advice to others running their own businesses in Everyday Entrepreneur (Dundurn, 182 pages, $19.99)

Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column Balance. E-mail Harvey Schachter

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