Fit for Purpose: How Modern Business Find, Satisfy, & Keep Customers

Review

The Fit-for-Purpose framework will close a lot of gaps in the pursuit of business agility, by enabling businesses to really understand what is working or not in its products and/or services by giving clarity on the selection criteria used by the customers.

The book starts by describing the elements that contribute to a product or service: the design, the implementation, and service delivery. And for a product to be fit-for-purpose for different customers, all the components need to be sufficiently good. Then the discussion evolves by using examples from real-world business (like pizza joints, taxis, and musicians), which makes the concept easily understandable for the different customers of the book.

By the end of the first section of the book, it is clear what the framework is about: it is about segmenting the customers and to find their purposes to select the product. Then the second section goes fully on metrics, which would worth the book by itself. You’ll reflect deeply about them.

Discussing on how business drowns in unhelpful metrics that get in the way of good decision making, the authors then categorize the metrics in four simple types: fitness criteria (the KPIs), health indicators, improvement metrics, and vanity metrics. A call to action is made to question why the metrics are collected and to determine whether they are fit-for-purpose.

On section III, Managing Fit-for-Purpose, the book explores the quantitative tools and the decision making available in the framework. And on the last section, it explores how the framework integrates with other tools and methodologies and also exposes its shortcomings.

The journey of David Anderson to expand evolutionary management methods throughout the entire business is truly remarkable. This book is a solid start for the upcoming books that will form the trilogy. The book could be shorter, but besides this little downside in its implementation, it was fit for my purpose. I hope it will be fit for your purpose too. Recommended.

Some quotes

Third, customers choose products and services by relatively few criteria, yet many companies drown in data and metrics. Fourth, frontline staff are a great source of knowledge about customer purpose, yet the frontline staff in many companies are among the shortest-tenured, lowest-paid, and most disconnected from the decision makers.

What this story clearly illustrates is that customer satisfaction requires attention to all three elements—the product design must be right, the implementation must be right, and the service delivery must also live up to expectations. If any one of these elements isn’t good enough, disappointment ensues, resulting in poor reviews and a lack of recommendations.

Different purposes, different selection criteria, different vendors; same product, but at differing quality levels. Neeta’s purpose controlled her selection criteria. To understand what your customers expect and what keeps them coming back again and again, you need to understand why they choose your product or service. You need to understand their purpose—the customer’s “why.” What purpose were they fulfilling when they consumed your product or service?

Interestingly, for many tangible goods physical businesses, the people who know most about the customer “why” are often the lowest paid, shortest tenured staff members. Many businesses don’t value their customer interface, their customer-facing staff. They treat these personnel as fungible commodities and accept high levels of staff turnover. There is no institutional memory and little learning. Valuable information—almost impossible to acquire even via expensive market research—leaves with every employee’s exit.

Segmentation based on customer purpose—based on “why”—should be your new go-to-market strategy, and correctly identifying your customer’s fitness criteria is core to your success. An ability to correctly identify fitness criteria and respond to them with appropriate designs, implementation, and service delivery is what will make your business robust in the coming years.

Fitness Box Score and F4P Cards are new tools to understand your customer’s “why.” They have evolved to give you actionable information. These techniques also offer substantial improvements over the popular Net Promoter Score (NPS).

Fitness criteria are used to make selections. Fitness Criteria are KPIs—they indicate the likelihood of a desirable outcome that will satisfy the customer.

We believe many companies are using the term “key performance indicator” for metrics that do not reflect selection and do not predict desirable outcomes and satisfied customers. As a result, these businesses are optimizing for the wrong things—they are like the teams playing against Oakland in 2002, selecting players based on criteria that do not directly relate to winning.

We believe that too many companies measure general health indicators and treat them as key performance indicators. They are then puzzled when their performance is not market- or industry-leading. They are like cyclists with very low resting heart rates who simply can’t understand why they aren’t winning races. There are no medals for lowest resting heart rate!

We believe that a company’s metrics can be classified into four categories:

• Fitness criteria, with a threshold, used for selection (by customers)
• General health indicators, with a range, used to monitor capabilities, or aspects of the business
• Improvement drivers, with a target, used to motivate improvements, and generally linked in a causal fashion to fitness criteria
• Vanity metrics, which make us feel good, where more is always better

Fitness criteria are your KPIs. They affect customers’ choices directly. For each fitness criterion (KPI), you have to know what level of performance you need to win customers in each customer segment, that is, what levels they deem acceptable or exceptional.

In summary, fitness criteria have two thresholds: The threshold of acceptable performance, below which we are unfit-for-purpose The threshold of exceptional performance, beyond which we have overserved the market segment

Lots of metrics already tracked by companies are health indicators. They don’t affect customers’ choices, but they may be the businesses’ vital signs. They tell us whether we have a pulse. They tell us if our business is healthy enough to pursue its strategy. Sometimes they give us advance warning if we’re in danger of missing our fitness criteria. A sudden change of a health indicator—an upward or downward trend—should cause the business to re-evaluate its strategy or operations. They are performance indicators, but not key ones!

General health indicators tell you that your business is alive, and changes in them indicate that the business is doing better or worse or that something may have changed in the environment that is affecting performance.

For your metrics to be fit-for-purpose, you need to be able to identify their purpose and categorize each accordingly as a fitness criterion, an improvement driver, or a general health indicator. You should be able to identify thresholds for fitness criterion, targets for improvement drivers, and ranges for general health indicators.

Can you align your improvement drivers with fitness criteria? Can you align general health indicators with improvement drivers? For example, production rate was a general health indicator for Ferrari that aligned to order cancellation rate as an improvement driver because delivery lead time was a fitness criterion for the customer. If you can categorize your metrics and show alignment between them, then they should be driving effective behavior and directly contributing to your economic performance.

Improvement drivers: Have a target value to be achieved over time. When the target is reached, consider deprecating the metric or changing it to a health indicator and establishing the healthy range.

There are four categories of commonly recurring selection criteria that provide us with measures for determining whether a product or service is fit-for-purpose:

• Lead time and its predictability
• Quality and its predictability
  • Functional
  • Non-functional
• Safety or conformance to regulatory requirements
• Price or affordability—although price may require some special treatment

However, no matter what business we’re in, it’s important to have a delivery capability with understandable, measurable lead time. Without an understanding of our delivery capability, we may not be able to continue taking customers’ orders with any confidence that we can deliver within their expectations or acceptability thresholds. Lead time is such a universal fitness criterion that every business should be measuring it.

This comparison shows us that we need to consider at least two criteria related to lead time: (1) the duration of time in the average, or typical, case; (2) the variability of time, measured not by typical or average cases, but by those closer to the best and the worst cases. We need the average time and the range from shortest to longest. In other words, ask not one question about time, but two: how fast? and how predictable? Customers may care sometimes for one, sometimes for the other, or sometimes both.

In summary, the concept of functional versus non-functional quality is this: functional is the “what”; non-functional describes “how well” the “what” is implemented. In some domains, such as music, the word “fidelity” is used to describe non-functional quality. In some analysis literature, elements of non-functional quality are referred to as “the -ilities”—that is, predictability, reliability, durability, and so forth.

Treating all work homogenously implies you have only one market segment, with one set of expectations, and similarly, homogeneous risks to manage. Thinking that you have only one segment is convenient; it allows businesses to focus on optimizing costs. This often comes at the cost of sacrificing quality, resulting in considerable customer dissatisfaction. A focus on cost cutting is likely to leave you unfit-for-purpose in the eyes of many frustrated customers. A knee-jerk reaction to address dissatisfied customers can result in overserving segments and driving costs up.

You should improve service levels iteratively and incrementally. Establish an improvement driver metric—something you can measure, ideally quantitatively, on a regular basis. Put in place the instrumentation to get feedback on whether your changes are affecting your improvement driver. Assuming you have confidence that an improvement driver is aligned to a customer fitness criterion, you can use that to establish whether your product specification, service design, or service delivery is at an acceptable level.

Once you’ve achieved fitness-for-purpose, stop there—at least for the time being. There is no need to overserve a market. Your focus can switch to improving margins without loss of customer satisfaction. Inevitably, competitors or market innovation will change customer expectations and the cycle will repeat; you will once again need to focus on improvements. The tighter you can make your feedback loops, the greater agility you can exhibit as a business, the faster you can sense and respond.

When customers adopt and use a product for a purpose the designer didn’t intend, this is known as “exaptation.”

Classes of service must mean something tangible, not just an excuse to charge more and hope the customers feel superior and pleased with themselves. On the other hand, if the business realizes they’re overserving their market, they could note the opportunity to turn the part of the service where they exceed fitness thresholds into a premium class of service, providing that they can identify a niche that isn’t overserved at the current level of service.

At the time of writing, we perceive that the skills in user experience design exist to design products based on purpose but marketing and user experience design aren’t well aligned. At the same time, the engineering skills exist in sufficient numbers to build products based on web services platforms and deliver product lines as SaaS or mobile applications, but companies don’t take advantage of platform engineering often enough. What is currently lacking is the alignment of marketing and strategic planning to think of the market as a set of segments based on purpose. To strengthen their fitness-for-purpose, companies need to align market segmentation with design, and at the same time take advantage of platform engineering and its flexibility to provide segment-aligned variety in their offerings.

Good metrics are vectors with two dimensions. As David discussed in his first book, Agile Management for Software Engineering, in 2003, cycle time for a task should be paired with quality. The denominator in each dimension of the pairing should be the same, and ideally it is something of customer value, such as a feature for a software application. So, cycle time per feature should pair with escaped defects per feature. The first is a productivity measure that we seek to minimize, and the second is a quality measure that acts as a constraint, ensuring that we don’t sacrifice quality in

The Fit-for-Purpose Framework is designed to deal with underdeveloped markets where there is room for innovation and the opportunity to tailor the design, the implementation, and the service delivery to specific needs related to the customer’s purpose. It’s for markets where logically assessed choices are still important.

You will almost certainly want to augment fit-for-purpose surveys and Fitness Box Score with other information. We are making no claims to the notion that Fitness Box Score is the only metric you will ever need. We are saying that using Fitness Box Score to quantify how fit-for-purpose your products and services are is a vital survival mechanism that will enhance your competitiveness and longevity.

In general, we prefer facts to speculation. So, asking an existing customer, “How did you learn about us?” or using a coupon or discount code technique to track referral business is much more appealing to us. As discussed in the next chapter, NPS asks customers to speculate about their future behavior. Speculation about the future, and especially about human behavior, is a notoriously unreliable source of data for decision making.

We view Fitness Box Score as a modern augmentation. It doesn’t just tell you whether your clients like you or not, it gives you specific guidance on where to apply your improvement efforts and what specifically needs to be addressed to improve customer satisfaction. In this sense, Fitness Box Score serves a different purpose than Net Promoter Score.

As Von Moltke saw it, strategy adapts means to ends, which is a concept more obvious to military commanders than to business leaders. In other words, military commanders only ever pursue strategy when they believe they have the capability to enable it.

When you see that many enterprise services connect to each other and one acts as a customer of another, translate the fitness criteria of the customer-facing service into the fitness criteria of the other service. Finally, use the observations and input of the frontline staff to inform the strategy. The Fit-for-Purpose Framework makes it easier to follow the Mission Command doctrine in commercial enterprises.

Doerr recommends that the top five OKRs for a business should be set at a strategy review. The Fit-for-Pupose Framewok can provide input on market segmentation for this review. This information may be used as input to setting objectives and key results. OKRs can be expressed as committed or aspirational.