Friday, July 10, 2020

Less Friction Means Better Business Results

No business is ever completely, 100 percent effective at organizing its resources to attain its business mission. To use an analogy from thermodynamics, achieving any objective means overcoming inertia, which is a form of resistance or friction


Sales friction can be understood as anything that prevents a customer from completing a purchase. Friction has a major influence on conversion rates for all business models, business to business or consumer retail. According to Aberdeen, 92 percent of organizations have below-average sales conversion rates simply because of some kind of friction in the customer journey funnel.


source: Business Matters

Friction exists in virtually all parts of any business, because humans are not perfect, systems and processes are not perfect. 

New products do not materialize as if by magic. Teams of developers, designers and manufacturing personnel must cooperate to create each new product, in volume. 


Financing has to be supplied to support all those efforts. Marketing teams must create sales channels, while sales processes must be aligned to move products into the hands of buyers. Support operations must exist to handle after-sale support, training. Logistics teams must store, ship and track products from factory to warehouse to retail channels, handling returns when necessary.


source: Khan Academy


None of that can happen with perfect efficiency and without friction.  Meetings and memos, for example, are necessary to ensure that all activities are synchronized. But such meetings and memos arguably represent inefficiency, time spent on activities other than the actual effort to discover needs, devote people and money to create products to satisfy those needs, price products, manufacture and then support the products, develop sales channels and build awareness among potential buyers of the values of the products. 


When product changes have to be made, causing retooling of the manufacturing process, that is friction. When internal parts of an organization battle with others, that is additional friction.


The promise of all information technology is that friction is reduced. The whole point of machine learning, deep learning and artificial intelligence overall is to discover what customers want, faster and more accurately.



The whole point of internet of things sensors is to monitor processes to prevent bottlenecks, wastage, avoid machine breakdowns or damage. The whole point of customer resource management is to better understand buyer needs and preferences. The value of inventory management is to reduce the cost of building, storing and shipping products to channel partners and customers. 


Call centers, for example, use artificial intelligence to answer customer questions faster, more accurately, with better outcomes, using less customer support time and effort. Retail sensors and inventory systems help retailers keep shelves stocked, and create insight into any potential changes in customer demand. 


In other words, all advanced information technology, from AI to blockchain to identity management and automated cloud computing processes, are designed to reduce business friction. Reduced friction, by intent, lowers cost, raises profits, identifies customer demand more effectively and allows firms to more rapidly move to produce and sell products customers desire. 


When any firm can reduce friction, in any part of its business, it has the potential to achieve better business results.


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