Chetna

Customer Lifetime Value (CLV) is a metric that shows the total revenue any business can expect from a single customer account throughout their business relationship. This metric considers a customer’s revenue value and compares it to the company’s predicted customer lifespan. This is a prediction model which have varying levels of complexity and accuracy, from experimental to the use of complex predictive analytical techniques. Below is one of a simpler example to understand the CLV formula Assumptions: · Profits generated by Customer A each year = $1000 · Number of years since they are customer of the brand = 5 years · Cost to acquire the customer = $2000 The CLV of this customer would be: Annual profit x # of years they are customer – acquisition cost $1000 x 5 - $2000 = $3000 Another detailed example of CLV formula with more complexity by changing the initial assumptions: · Annual revenue per average customer = $2000 per annum · Product costs associated with Avg customer’s purchases = $500 per year · Firm spends additional $100 an year per customer for Customer Services · Annual retention rate or loyalty rate = 80% · Average costs to acquire new customer = $1000 In such a case, we have similar challenge to the previous example but the information needs to be modified from above data to feed into the CLV formula. As a first step, we will calculate the averahe annual profit per customer by deducting the two sets of costs i.e. product & service costs from the annual revenue. $2000 - $500 - $100 = $1400 The acquisition costs here are $1000 but we don’t have the average lifetime of the customer in years. We have the Annual retention rate. This is a common situation in workplace as it is relatively easy from customer databases to calculate the retention rate. So we will now convert a retention rate to the avg number of years that the customer will deal with firm. 100% divided by (100% minus the annual retention rate) or (1/1-annual retention rate) So for 80% loyalty rate, the average customer lifetime will be: 100% / (100% - 80%) = 100% / 20% = 5 years avg customer lifetime period Now we have all inputs for simple customer lifetime value formula, we can calculate CLV as: $1400 (profit) X 5(years) = $1000 (acquisition) = $6000

Quality circles were originally described by W. Edwarda Deming in 1950’s. Deming had praised Toyota as an example of this practice. Later, this idea was formalized across Japan in 1962 and expanded by the others such as Kaoru Ishikawa. Quality circles are described as small groups of 5 to 8 employees, doing similar work who meet regularly & voluntarily to identify, analyse & resolve the work/ project related problems. Each team member of this small group participates in activities, utilizing problem solving techniques to achieve improvements in the project and also to help themselves & team members in mutual development in the process. The concept of “Quality circle” is based on the ‘respect for individual humans’ as against the traditional assumption of mistrust & suspicion between team and management. The premise of these is based on the fact that people who do certain jobs everyday know more about it than anyone else and hence their involvement is the best way to solve the work related problems. Key characteristics of Effective quality circles are: 1. People must participate 2. The atmosphere for these should be kept informal & comfortable. 3. The objective should be set clearly to all members 4. The members must listen to each other 5. The decisions should be with everyone’s consensus 6. For any action, the clear assignment of tasks should be there & accepted by members 7. There should be no leader who dominate the group 8. Feedback is important until a final solution is found Benefits of Quality Circles (Q.C): · Q.C can help resolve certain chronic problems of an organization which creates frequent hurdles · A QC is a capable work force which can undertake any difficult & challenging assignments that an organization might undertake · Increased team work · Smooth working · Better mutual trust · Improved quality · Increase in productivity · Cost Reduction · Greater sense of belongingness in work groups QC use the below seven basic Quality improvement tools: 1. Cause & effect diagram / Ishikawa / Fishbone 2. Pareto charts 3. Process mapping & data gathering tools like check sheets 4. Histograms, Spot charts & pie charts 5. Run charts, Control Charts 6. Scatter plots & correlation analysis, and 7. Flowcharts Is this concept still relevant in Organizations practicing Lean Six Sigma? Why/ Why not? The concept of Quality circles is still in practice in the form of Kaizen & similar worker participation schemes in most organization. As the tools used by QC are still prevalent and used by organization practicing Lean Six Sigma. The Agile approach also has similarities to the Quality circles. The values & principles behind Agile aren’t all that new. They did emerge in the early days of Lean, Kaizen, QC & process redesign. The approach, roles & the objective seems like Agile is a twin of QC Listing below similarities: Mix of roles in the team: QC has a mix skill & roles of members without hierarchy. An Agile team consists of the mix of skills based on sprint focus. Hierarchy is not important and various roles participate & work towards a team outcome. Single Focus: QC’s had single focus to find ways to improve quality. Agile sprints also have a single focus to find the best solution under a specific sprint. Continuous Improvement: Agile’s manifesto calls for learning & improving. The QC’s followed Kaizen standard of continuous improvement followed by suggestion for improvements. Both approaches realize that ‘learning & improving’ are core principles and driving forces for improved quality. QC Basic Process: Identification, Analysis & Solutions: Basci process that QC followed was Identify quality issues, analyze & suggest solutions. This is a perfect match to Agile. Based on the sprint focus, the team identifies. Analyze & produce best solution for the sprint. Reflection: QC is a process to reflect of what we are doing & how can we do it better. The 12th principle of Agile also states “At regular intervals, the team reflects on how to become more effective’. Results: Listed below are some interesting results that QC produces. But if you read them as Agile results, they will make complete sense even with Agile: · It infuses Team spirit and improves decision making · Improves employee communication & collaboration across levels · Builds confidence, trust & incorporates a sense of belonging · Improves quality, production & productivity along with enhancing CSAT

The Moscow method is a technique used for prioritization in business analysis, Project management, and software development to be able to reach a common understanding of the stakeholders on the importance of each requirement for the delivery. This is also known as MoSCoW analysis or MoSCoW prioritization. It helps the teams to manage their time & effort. This technique classifies the importance of different characteristics of a Project or product according to their importance. The name itself is an acronym of the 4 categories of Prioritization (adding two ‘o’) · Must have – Essential Requirements. Critical features with no replacements · Should have – Important & designed Requirements. These can be substituted if necessary · Could have – Improvements in Project or product. There can be different alternatives to these · Won’t have – Characteristics which are agreed as not to be adopted hence no one should waste time in implementing them Example of a project for Website Development: Scope: Website Development for a Law firm Requirement: A professional site where people can visit & register. Once they enter, they can even track their ongoing court cases How to Follow MoSCoW Method: Must have: · Strong program code without any bugs · Proper Register System · A safe & reliable personal directory ensuring customer’s privacy Should Have: · Fast Speed · A good Design & aesthetics · Feature of Notifications via email Could have: · Customized Menu option · Suggestions box · Blog section with latest news, posts or updates Won’t have: · Any paid content · Public members view / section · Advertisements Why is MoSCoW Method important: · Saves Professional’s effort & time on useless tasks that might be unwanted by the customer · Hours spent in modifications of features which might not be important for customer or missing an important thing · Concentrates the team’s effort and forces them to focus on what is important

Background: In 1989-90, under the direction of Jack Welch, GE launched a team based problem solving and employee empowerment program called as “Work out” modelled after the Japanese quality circles model. Though the model was a huge success, but the rate of adoption through the business was not good. This frustrated Welch. This made Welch & GE realize that everyone was entering an era of constant change and there was a need to adapt to the changes. Only the fastest ones could be the survivors. He then formed a team of consultants (including Steve Kerr who was to become the GE’s first Chief Learning officer) to study the best practices in change management and suggest a tool kit that Welch’s managers could easily implement. The result of this was the “Change Acceleration Process, commonly known as CAP) Concept & components of Change Effectiveness Equation This team of consultants went ahead and studied hundreds of business initiatives & projects. One of their understanding was that just a high-quality technical solution may be insufficient to guarantee a success. It was observed that a high number of failed projects actually had an excellent technical plan. The team also found that it is the lack of attention to the cultural factors that derail the project at the time of failure & not the technical strategy. Failure here is defined as failing to achieve the anticipated benefits from the project. These are benefits that are assumed at the start of the project. In order to describe this in a simpler way, the team created a Change Effectiveness Equation QxA=E Quality of product x Acceptance =Effectiveness of the initiative This means that the Effectiveness of any initiative is equal to the product of the Quality (Q) of its technical strategy and the Acceptance of that strategy. This means that the people side of the equation is as important to the success as the technical side of the strategy. The team used a multiplicative relationship so that if there a zero acceptance, the total effectiveness of the initiative will also turn zero regardless of the strength of the technical strategy / implementation. As a project leader, one must be able to measure the change management to assess what is working and what isn’t from people / employees’ perspective. One of the method is to define certain Change Management metrics & KPI’s which will help measure, quantify and maximize the effectiveness. Some metrics & KPI’s that can be implemented for effectiveness are: · Employee Readiness assessment results · Employee engagement & participation measures · Employee Feedback · Communication effectiveness · Training participation & effectiveness measures

A Cost Benefit Analysis (CBA) is an approach to estimate strength & weakness of alternatives which are used to determine options that provide the best approach to achieve benefits. This approach is commonly used in commercial transactions, business & policy decisions and project investments. This analysis includes the expected balance of benefits & costs considering any alternatives or proceeding with status quo. Although implementing a cost benefit analysis is an informed estimate of the best suited alternative, a perfect appraisal of all present and future costs and benefits is difficult. The CBA begins with compiling a comprehensive list of all associated costs & benefits related to the project or decision. The various costs involved are: Direct costs (like inventory, raw material, manufacturing/ development costs) Indirect costs (like rent, electricity, management overheads) Opportunity costs (like alternative investments, buying a ready software or building/ developing new one) Potential risks (like regulatory risks, environmental factors etc) The benefits of CBA include: Increase in Sales & revenue with a new product or an increased production Intangible benefits such as Customer satisfaction, improvement in employee productivity, faster delivery etc. Increased market share or edge with competitors The Analyst should consider all the monetary costs for cost benefit list ensuring not to underestimate or overestimate the benefits. The result of comparison between aggregate cost & benefits should be taken to determine the rational decisions of going ahead with a project or not. The business can review the project and see if any adjustments by increasing benefits or decrease in costs are required to make the project viable. Are there any situations where organizations give an exception and still take up projects that do not have favorable cost benefit analysis? Provide examples. Yes, there can be projects where the Cost Benefit Analysis may not be considered due to criticality to business & the ones where benefits are beyond cost factors only. For example - projects that involve less capital expenditures and are short term developments, need less time to complete, the CBA may not be sufficient to make a well informed decisions. Even in cases for long term horizon, a cost benefit analysis could fail on account of important financial concerns like inflation, interest rates, varying cash flows or current currency value.

EMO Index is a mechanism to quantity the spirits of a patron, a cluster of patrons or contributors to an Organization or facility. This reform the way customer satisfaction has been measured over years. EMO Index basically measures the emotional state of patrons and participants. It is a combination of the Net Emotional State (stability of emotions felt) and the Net Intensity Balance (intensity with which they are felt) and the measured values range from -100% to +100%. Since EMO index is calculated at a discrete level, it can also categorize patrons into extensive and universal emotional states called as Groups/Batches. For example, Admirers are a group of patrons who rate between 80 to 100, Supporters are the one who rate between 55 to 80, followed by Rivals who rate between -30 to -100 and many more Above categorization makes it stand out from the traditional method, which used to predict behavior based on Age, status, groups interested in or even linked to patterns of purchase, occasion of purchase etc.

Decisional Balance Sheet Sometimes you are faced to make some important decisions & you spend a lot of time searching for a right solution in a hope to avoid making any wrong choices. One of the simpler way to do is by using a Decision Balance Sheet. It is an effective decision-making method that enables to make more balanced and confident decisions. The Decision Balance sheet is a tabular form of method to represent the pros and cons of choices in order to help make decisions in a certain situation. The decision balance sheet helps making decisions based on the inputs received from various team members while analyzing the situation. Based on the inputs, it is easy to decide to go for or against a given problem or a change, helps improve the understanding of the situation & speeds up the decision-making process. In this exercise, the team members are encouraged to consider different perspectives to be able to compare options. We will use a simple example of a family who wants to decide if they should change the school for their child or not. We will be using the decision balance sheet in this example and mention the pros and cons of this idea. To make the decisions easier, we will also use a scoring system by giving numerical weights to the pros and cons. With this, the result & decision will be clearer & easier to make. Pros Cons Improved Quality of education (5) Increased cost as other schools have higher fees structure (-4) Option to move to international board (3) Time to settle in new environment (-1) Better teachers in new schools (4) No known friends in new school (-2) Reduced school time (2) More number of assessments in new school (-3) 14 -10 The final score here suggests that parents should opt for new school. Another example of using Balance sheet for a personal decision of moving to new city for a job. The challenge is to decide weather to accept the new offer in another city. Pros Cons New experience (2) Relocation to new city (-4) Higher salary benefits (4) Stress of staying away from family alone (-3) Experience of meeting new people (1) Uncertainties (-2) More job options for future in new city (2) Pollution & traffic (-2) 9 -11 The final scores suggest that he should not relocate for a new job.

What is North Star: North Star, also known as Polaris or Pole star is the brightest star of the constellation Ursa Minor. What is the North Star Metric? The North star metrics is the one which best demonstrates a company’s product value to its customers. The right North star guarantees a sustainable long-term growth. This means that North Star metrics is a key success indicator of a product team. A North Star Metrics should qualify below three major parameters: 1) Lead to revenue 2) Reflect Customer Value, and 3) Measure progress If a metric hits these three parameters & every department contributes to improving it, the company will grow sustainably. If the focus is to grow the right North Star metric the company’s income will grow. This metric will help to know that what improvements need to be taken and how they will impact their future growth. Organizations have a defined mission to meet a particular need and deliver a differentiated value to its customers, better than their competitors. The North Star Metric tracks the tangible assessment of success or failure of the product, revealing what is working in favor and what’s not. In summary, a North Star metric should measure exactly when the customer gets value from the product, represent your overall current product strategy and be a leading indicator for future business outcomes that are critical to one’s company Quoting an example for reference: An e-commerce company could have a North Star metric of the number of orders placed for Mobile devices and delivered. Instead of tracking only the count of orders, the metric should also track value in the form of customer experience & positive feedback/review of the product & its usage on the app.

A product Portfolio Matrix also known as BCG matrix help to achieve the correct mix of new & established products in order to maximise the overall value of a company’s portfolio. It s simple matrix that categorizes the products on the basis of: A Product’s market share & its overall market growth. This matrix categorizes the products as Question marks, Stars, Cash Cows & Dogs. Question Marks: Products of this category are in a growing market with low market share. They are the most intensive products and required extensive investments and resources to increase the market share. Investments in this group are typically funded by Cash flows from Cash flow quadrant. A firm ideally wants to turn the question marks into Stars. With market declines, the question marks end up becoming dogs. Stars: Products in this quadrant are the ones which are growing quickly and have high market share. They are the market leading products which require high investments to retain their market position, increase growth and maintain the competitive advantage. Stars consume a high amount of cash but also generates large cash flows. As a market matures and products continue to remain successful, stars migrate to become cash cows. Stars are any comoany’s prized possession and in top of a firm’s product portfolio. Cash Cows: Products in this quadrant are in a slow growing market where they have a high market share. These products are thought of as leaders in the marketplace. The products have a significant investment in them and do not required further investments to maintain their positions. Cash flows generated by cash cows are high and used to finance stars and question marks. Products in this quadrant are ‘milked’ and companies invest as little cash as possible while reaping profits from the products Dogs: Products in this quadrant are in a slow growing market and products have a low market share too. These products are able to sustain themselves and provide cash flows but the products never reach the stars quadrant. Firms generally phase out products in dogs quadrant unless these are complimentary to other =existing products or are used for competitive purposes. Dollar sign is a representation of Cash cows & Cross is a sign for Dog As a methodology, DMADV should be implemented when A product or process is not in existence in the company and it needs to be developed. Hence the DMADV can be applied at the STAR stage. DMAIC is implemented when the product or process is existing and has been optimized but does not meet the level of customer specification or Six Sigma levels. Hence DMAIC can be applied at Question Mark stage: The Question marks have a higher growth potential and a low market share which makes their future potential doubtful. Since the growth rate of products is high in this quadrant, they can become cash cows and ultimately stars with the right strategies and investments. However, with low market share - any wrong investments can downgrade them to Dogs even after lots of investment.

Standardized work is one of the most powerful lean tool. The Standardized work forms the baseline for Continuous improvement by documenting the best practice. As standard improves, the new standard becomes the baseline and so on. Improving the standardized work is an ongoing process. The standardized work consists of below three elements: 1) The first element of standard work is Takt time. Takt time is the rate by which work must be performed to satisfy customer demands. This can be done by: dividing the net available time that an organization has to work in a given period. E.g an organization has 600 minutes to work per day and the customer demands 300 outputs, their takt time would be 2 minutes per output. Takt time sets the pace of work to match the customer demands & preventing the waste of overproduction. 2) Work Sequence is the 2nd element of Standard work. This is done by description of the work done in a numbered sequence for all the manual tasks. It may also be called as dance steps of a process. It is very important to clearly define the numbered sequence so that different employees working in that process can get the same expected result. If the sequence is not followed, the same results cannot be achieved. This shall also avoid problems like wrong parts, missing parts, defects which may often occur in any process when standardized process is not followed. 3) Third element of standardized work is “Standard Work in progress”. This is referred to the minimum amount of work necessary in a process to keep it flowing smoothly. The Standard WIP includes all in-process materials being worked on manually, parts being processed inside a machine or the parts used for setting things up. An example of baking cookies where we will normally bake a batch of cooking while preparing the next batch to ready to go in for baking. In this example, the cooking which are baking as well the ready to bake outside oven are considered as Standard WIP of this process. Standard WIP can be calculated as (Manual Cycle Time + Auto Cycle Time) / Takt Time. Benefits of Standardized work: · Standardized work helps new joined employees to understand the process quickly and hence the training time can be reduced · Brings a culture of continuous improvement · Employees are more focused & empowered to think · While employees are following standardized work, it reduces the defects and process variations. · It helps to reduce scrap and rework waste. · It helps in reducing operational costs One of the examples of Standardization in a Technology team Team Charter: The team is a Responsible for transition of new BOTs from development to support Problem Statement: No defined or standard onboarding / incident management process. Goal: The implementation of onboarding best practices was required to optimize operate / support run the BOTs post-production Challenges: Lack of standardization in exception categorization, fault tolerance, error logging requiring the team to invest a lot of time to understand the nature of issue - business / system; and take appropriate action. Also impacting the business downtime ~ 15 incidents getting reported per process (100+ process in prod) on a monthly basis Previous State: · No defined on-boarding process / governance model. · Code deployed to production by L3 team after taking KT from the developers [4 dedicated FTEs supporting the on-boarding efforts across different portfolio’s] · No transition from L3 to L2 as automated processes are transitioned to BAU · No std change management process Solution: · Implemented coding best practices · Onboarded Process model · Defined an onboarding and governance model · Developed Score card for ranking each process before onboarding · Ensures the code deployed to production adheres to the BP / UiPath coding best practices (proper exception categorization, exception emails specifying the action to the taken by the team etc.) · All supporting documents are reviewed and validated before process onboarding Current State: · Defined on-boarding process / governance model. · Process managed in well-defined frame by the team · Code deployed to production after reviewing the code against the defined best practices · KT taken by existing L2 resources ensuring smooth transition from HyperCare to BAU. · Proper Change management process followed · BOTs are measured against a tangible Hyper Care exit criterion thereby ensuring that only stable processes are allowed into BAU Onboarding Governance model: Before deploying a code to production, team reviews the code against best practices (42 best practices) defined by the vendor For every new process onboarded, team manages a scorecard to ensure that all onboarding process guidelines are adhered to before an automated process is deployed into production Result: · Improved success rate of new automated processes thereby reducing incidents · Saving of ~4.8 FTE