Have You Established Constancy of Purpose?

A software services company had a new product offering that was intended to replace a previous product suite. This large, customizable product was a major decision for their customers, who often required several months or years to evaluate the new product and decide whether to adopt it. The migration process was not automatic, so the company offered a conversion service, and this is where our story begins.

The department selling the conversion service, together with management, decided strategically how to price the service; since customers could not migrate without this service, it was decided to provide it at cost or even at a loss, in order to secure the much larger and more-lucrative ongoing revenue from the product. This pricing was communicated to clients around the world, and they started budgeting for a changeover one or two years down the road, so they'd be prepared for the migration and have a clear path forward.

Then, management shuffled personnel and assigned this area to a new manager, who happened to be from a business development and sales background, rather than product development. This manager believed that every transaction required a certain minimum profit margin or it wasn't justified. So, in a new pricing strategy, the cost to the customers was immediately increased by about five hundred percent!

Sales people were forced into the uncomfortable position of having to tell customers that the price for their already-budgeted conversion service had now increased by a factor of five. Customers who had already decided on adopting the new product felt understandably betrayed and cheated by this last minute price change. Customers who had not yet made a commitment were also upset, and many chose not to migrate, adopting competitive products instead.

The sales people felt "dirty", "dishonest" and resentful at being forced into betraying their customers' trust, at doing serious damage to their professional relationships. Sales slumped. Several people quit in frustration, both in the service organization and the sales organization.

As Deming asked in Quality, Productivity, and Competitive Position, "Has your company established constancy of purpose? If yes, what is the purpose? If no, what are the obstacles? Will this stated purpose stay fixed, or will presidents come and go? Whom does your president answer to? Whom do your board of directors answer to?"

The same questions can be asked in every department - Have you established constancy of purpose? Will this stated purpose stay fixed, or will managers come and go? In several Dilbert cartoons, Scott Adam's jokes about bungee bosses, who swoop in, make some changes, and then get yanked away. The churn, the waste, and the frustration that results from such frothy changes in purpose drive everyone crazy, and drive losses down to the bottom line.

Strive to create constancy of purpose that will endure beyond the next change in personnel.