Tuesday, August 07, 2007

Kalamazoo Dog House Story (Part 4)

How do projects help translate strategic objectives to front-line action? Our story continues. See also Part 1, Part 2, and Part 3.
Doghaus.biz introduced process discipline and Project Management to the dog house industry, with great results. Unlike archrival PetKorp, Doghaus.biz was the first to introduce custom orders to an industry that had been dominated by retail sales. CEO Michael Haus' has one strategic objective -- his economic engine -- which is to focus his business on Profit per Deliverable (PpD). That is, he tracks the price and cost of each dog house (deliverable) individually. Accordingly, his business model requires hiring low-wage installers for simple dog house installations (non-projects) but employing local construction firms for custom projects. He created an executive dashboard that tracks PpD on a monthly basis. His dashboard tracks custom-project metrics and non-project metrics on separate gauges. The PpD(Projects) indicator always shows a healthy profit, but the PpD(Non-Projects) indicator usually shows negative cash flow because it competes directly with PetKorp retail sales. So the entire Doghaus.biz executive team continually applies pressure on the operations staff to cut costs for the non-project installations.
How does this project vs. non-project tracking system play in Kalamazoo? See the comments section to find out....

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posted by Garry B @ 6:41 PM, Read More...  
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1 Comments:

At 6:56 PM, Blogger Garry B said...

In the case of Alice and Betty, next-door neighbors in Kalamazoo, the split between project-centered operations and non-project operations resulted in a rejected order. Alice, who wants a custom dog house, and Betty who wants a no-frills standard dog house, asked a Doghaus.biz salesperson "who will install our two dog houses, if we order from Doghaus.biz." The sales person replied, honestly, that she didn't know them by name, but the two installations will be handled by different subcontractors, because of the knowledge and skills required by Alice's dog house are different than the knowledge and skills required by Betty's dog house. Having previously ordered and canceled two dog houses from competitor PetKorpOnline because of a subcontractor altercation, Alice and Betty decided to pass on Doghaus.biz, and to continue shopping on-line.

So far, we've seen PetKorpOnline, whose "management by internal competition" methods have resulted in two canceled orders. This was because the strategy resulted in an altercation between competing subcontractors in Kalamazoo. Doghaus.biz has better business processes (with no internal competition) but it also exhibits a split personality at the front line, as perceived by Alice and Betty. Paradoxically, this split personality and resulting rejected order were the result of "success-oriented business management" -- tracking the profit of projects vs. non-projects for each deliverable.

In our final installment of this story (I can hear the cheers!) I will introduce the third and final competitor, a business that focuses on client service instead of project deliverables. The third competitor is called CanineClients.

 

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