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The key to modernization - separating core from context

Joanna Lutgen, VP of Marketing MCS | August 21, 2018

How many of us go to work every day living and breathing customer experience?  It’s the basis of all we do – especially as successful marketing departments. But it takes more time, more money and new ideas to be successful at creating a culture focused on superior customer experience. To do this successfully, it means modernizing your business by evaluating current processes, departments and resources.  You must also find operational efficiencies by updating, removing or outsourcing non-core activities providing time and resources to focus on core activities and modernizing them to better perform in today’s market, allowing you to focus on core – differentiating your brand through a superior customer experience. 

Geoffrey Moore, author and management expert, introduced us to the concept of core versus context. In a speech given at Stanford University, Moore explained, “Whatever is the new thing that creates differentiation, that’s core.” Meanwhile, context is any activity that doesn’t differentiate the company in the eyes of the customer. “If we do [context] brilliantly, we don’t succeed. If we do it badly, we get in trouble.”

Separating core from context is essential to modernization and to the success and growth of any company.  It is vital to extract resources from context to invest in the core. Outsourcing is also a smart way to help your company grow while saving money.  However, the advantages go beyond cost-cutting. 

For example, an intermediate holding company which is made up of multiple insurance companies and distribution channels approached Merrill last year. The company was experiencing tremendous growth and projected increased volumes in the coming years. They knew their current onsite facility would not be able to handle the increased volumes without adding capital and resources – expenditures ultimately reducing focus from their core objectives and goals. 

They needed to determine if it would be more advantageous to invest in additional space and more equipment or to outsource these services to a partner that could handle the increased volumes, ensure scalability and reduce overall costs. The company quickly realized that investing in additional space and expensive equipment to maintain internal production was not a viable option. The best option would be to find a partner that had the expertise, technology and equipment to support these communications on an ongoing basis.

After a thorough assessment, and rating of possible partners, it was determined that Merrill Corporation was the clear front runner and we were selected as their strategic partner. They selected Merrill because of our commitment to security and continued focus and investment in forward-thinking technology. 

Through a completely collaborative approach, we worked with the company with the goal of not only moving processes and production from one facility to another, but also embarked on a full review of the workflows, files, templates, product specifications and final output. From this review, our teams provided insights that resulted in streamlined processes, provided continuous cost savings and prepared the company to be better prepared for future implementations.

The company’s initial motivation for finding a partner and transitioning the creation and distribution of their communications from their onsite facility was ensuring that the necessary capacity requirements could be met and that production could quickly be scaled to meet increasing demands. Streamlining program workflows, simplifying data ingestion and eliminating unnecessary inventories, provided cost savings at a level the company did not fully anticipate initially and was an added benefit to the overall initiative.

Here are just a few of the key factors and benefits they discovered through our partnership:

  1. Ability to implement a more robust solution and more advanced technology without burdening IT
  2. Scalability to quickly meet current production levels as well as increased volumes
  3. Efficiencies created through streamlining workflows and processes
  4. Increase transparency into costs providing the ability to look at individual programs, communications, etc. to make informed business decisions.
  5. Capabilities to ensure redundancy and disaster relief controls

Over the course of a year, we completed three major program implementations with an additional program implementation and expansion of their current product portfolio in the pipeline for the coming months. Within that same timeframe, they realized a 78% reduction in fixed operational costs and, given the additional transparency we provided, they were quickly able to ensure additional efficiencies are identified and capitalized on.

Our partnership and the implementation of a fully integrated end-to-end solution, has allowed them to streamline processes, realign internal resources, reduce fixed costs, and obtain a more transparent view of overall operating expenses. The company’s project manager cited the following results:

Improved processes. A key improvement for the company has been the utilization of print on demand capabilities. This has resulted in less waste, additional cost savings, and easier processes for managing content updates and changes. In addition, the company is finding value in the reliability of utilizing our integrity manufacturing solution. Our Integrity manufacturing tracks communications at a page level throughout the production process, providing our clients absolute confidence regarding accuracy and compliance.

Significant cost savings. The company has realized a 78% reduction in fixed operational costs as a direct impact of their partnership with Merrill. In addition to the reduction in costs around facilities, equipment and labor, we have provided expertise and guidance in reviewing processes and product specifications for several pieces. These reviews have provided numerous efficiencies and cost savings to the company, with a spot assessment of sales kits for Medicare Supplements showing a 25% cost reduction overall alone.

Expense transparency. The company is now more able to review and manage. Adjusting costs on an individual program level is also now more efficient. Previously, many of the production and distribution costs were a part of the soft costs of operating an onsite facility, making it difficult to refer-back to specific pieces and programs. Now that the costs are upfront and detailed they are better able to understand contributing factors and more effectively manage costs.

Through our partnership with this company, they were not only able to reduce costs by a staggering 78%, they have better focus on their core and the ability to invest both time and resources into continued growth and success.

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