In a recent article, How IBM, Intuit, and Rich Products Became More Customer Centric, published by Harvard Business Review, Brad Power and Steve Stanton share their research into different pathways companies are taking to become more customer centric.
“…wanting to be closer with customers, and knowing what actual, operational pathways to take in order to achieve this are two very different things.”
IBM “assembled teams for each product or service that combined designers with engineers and created a new development process.” IBM “came up with a hybrid method for product development that combined elements” of both Continuous Delivery and Design Thinking.
Rich Products replaced their “old, functional “silo-based” process, [where] a marketing person with a new customer opportunity would contact his or her favorite R&D associate, the regulatory and quality assurance departments, packaging, and the plant. This ad hoc, sequential approach was replaced by a cross-functional team, which simultaneously accelerated its time to market and created a much more “intimate” relationship between Rich’s associates and its customers.”
Using the principles of Deep Customer Empathy, Go Broad to Go Narrow and Rapid Experiments with Customers, “Intuit began driving design thinking deep into its culture and operations. To do this they trained and deployed a cadre of 200 Innovation Catalysts who were embedded into the business units, created and held a large number of immersive experiential workshops, and added design thinking into their leadership training programs.”
The full article is well worth a read.
With all this talk about becoming Customer Centric or an Outside In organisation, how did we lose focus of our customers anyway and what is it we have been focusing on instead?
Many point to Adam Smith’s seminal work “The Wealth of Nations” and in particular his observations of the division of labour in English pin factories at the beginning of the Industrial Revolution for the answers. To paraphrase Smith…
A pin-maker could perhaps make one pin a day. But if the task of making a pin is divided up into 18 smaller, specialised tasks – i.e. one man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head, and so on – split up among 10 people, then they could make the equivalent of 4800 pins per man per day.
Essentially the division of labour in the pin factory Smith observed was responsible for a 4800% increase in productivity. Now which business is going to ignore that sort of productivity gain? As a result, the industrial revolution saw the productionisation of businesses and other organisations into conveyor belts of specialised labour that resulted in astronomical improvements in productivity and huge reductions in per unit costs. Conveyor belts with the customer at the very end, many steps removed from both the workers in the middle and those at the start who decided what product to build and how to build it. We became ‘product centric’.
Over time many of these products became commodities though and there would be a need to differentiate yourself by the service you offered. Of course some businesses and organisations, generally those that were small in size and local in geography, never lost sight of this.
Unfortunately though, particularly in large organisations, the production line mentality dominated and is as strong as ever even today. Take a look at this Mckinsey & Co article from 2014 “The Enterprise IT Infrastructure Agenda for 2014“, which recommends that IT departments “Make the transition to a plan-build-run organizational model”. Plan-build-run, hmmm, what does that sound like? At least it is heartening to see that some practitioners like Julian Dunn at Chef are not swayed.
Reading on, though, I came across the section entitled “Improve organizational execution”, and I have some concerns about McKinsey’s proposed remedies. It’s certainly true that organizational execution needs improvement, because IT organizations today are widely seen as being too slow, bureaucratic and inefficient to keep up with business demands. Why, then, does McKinsey advocate a “plan/build/run organizational model” when this kind of silo-ization is what negatively affects the speed of IT service delivery today?
The DNA of the industrial revolution has also found its way into the education systems of developed nations. Hence it has become ingrained in modern human history and is constantly perpetuated. This fantastic shortened and animated video of a talk given by Sir Ken Robinson explains how this same DNA has led to education systems that are not customer (student) centric and essentially “educate” our creative capacity out of us.
What I call “customer centricity” begins with creating a business culture where the customer is at the center of everything you do. In today’s highly competitive marketplace, it doesn’t matter how great your products are or how exceptional your financial prowess. As Don Peppers and Martha Rogers wrote in Return on Customer, “Without customers, you don’t have a business. You have a hobby.”
In other words, “customer-centric” isn’t just a buzzword — in the business world, it’s mandatory. But too many CEOs or entrepreneurs will just add “customer-focused” to their vision statement and call it a day. That isn’t enough, by far.
True, customer-centricity involves rethinking how business is done. It involves everything from strong efforts at insight and analytics to strategy and customer experience. It involves tearing down silos and thinking like a customer. For instance, your customer views all of your departments and functions as a single entity — and so should you.
Read the full article here.
Ian Golding touches on an all-too-familiar occurrence we all see in organisations we work in from time to time.
Over the last twenty years, I have worked in a variety of organisations across multiple industries who have all TALKED a very good game when it comes to being customer focused. If I had a Pound or Euro or Dollar for every senior leader who has uttered the words – ‘we want to put the customer at the heart of everything we do’ – I would have a nice little pile of cash!
As Ian explains “Talking about Customer Experience is EASY. Literally anyone can do it.” but…
The reality is that to START actually being customer centric, an organisation must acknowledge that it may not actually be customer centric in the first place. That is why the transition from TALKING to STARTING is HARD.
However, once an organisation has started…
When it comes to Customer Experience, an organisation’s ability to SUSTAIN its approach to Customer Experience INDEFINITELY is without question the HARDEST challenge of them all.
See Ian’s insightful thoughts in his full post here.
Seth Godin recently authored an insightful post on his Blog…
Customer service is difficult, expensive and unpredictable. But it’s a mistake to assume that any particular example is automatically either good or bad. A company might spend almost nothing on customer service but still succeed in reaching its goals.
Customer service succeeds when it accomplishes what the organization sets out to accomplish.
Seth goes on to articulate many uses of Customer Service, including:
- To create a significant competitive advantage by engaging with customers in a way that others can’t or won’t.
- To streamline the delivery of inexpensive goods produced in an industrial way.
- To lower expectations and satisfy customers by giving them exactly what you promised, which is not much.
- To raise expectations and delight customers by giving them way more than they hoped for, which was a lot.
- To dance with customers in an act of co-creation.
- To diminish negative word of mouth.
- To build extraordinary trust.
- To treat different people differently.
- To race with competitors to lower customer service costs just a bit more than they will.
- Because you can.
Every single person who makes budget decisions, staffing decisions and customer service decisions must to be clear about which strategy you picked, needs to be able to state, “we’re doing this because it’s congruent with what we say customer service is for.”
See Seth’s full post here.
Top-performing companies today are the ones that have moved from perceiving customer experience as a metric, to treating it as a management system, according to one of Bain and Company’s Asia-Pacific customer practice leaders.
Speaking at the Customer 360 Symposium, Bain and Company manager, Stan Swinton, said the shift towards customer advocacy often starts with metrics and a specialised business unit within organisations. The problem is, insights and practices aren’t usually disseminated to the wider business. He claimed a number of organisations are still in this camp in Australia and globally.
“From there, it then progresses to a movement, and that’s where we see more experimentation, wider conversations and multiple metrics across the organisation,” Swinton said.
Top performers today, however, go a step further and treat customer advocacy as a management system, Swinton said.
“This is defined as being business as usual, continuous, about people and process and what we do everyday, and it’s a whole-of-business approach,” he said. “Customer advocacy needs to be a system that touches every part of the business. Most of us are at a program level, but it needs to go through to a competency.”
With reference to Bain and Company and industry research, Swinton said organisations that have embraced customer as a management system and have
- higher Net Promoter Scores (NPS) than their competitors [and]
- have a growth rate two times that of companies with average customer scores.
They also boast of
- more empowered employees,
- maintain simpler products and services offerings,
- have been able to reduce operational costs by up to 15 per cent,
- get a bigger share of customer wallet, and
- have higher customer win rates.
Read the full article by Nadia Cameron at CMO.
“If it’s not a transformation to make the company more customer-focused, you’re making a mistake. Technology and economic forces have changed the world so much that an obsession with winning, serving and retaining customers is the only possible response.” writes Michael Gazala of Forrester Research.
This customer-driven change is remaking every industry. Cable and satellite operators lost almost 400,000 video subscribers in 2013 and 2014 as customers dropped them for the likes of Netflix. Lending Club, an alternative to commercial banks, has facilitated more than $6 billion in peer-to-peer loans. Now that most B2B buyers would rather buy from a website than a salesperson, we estimate that one million B2B sales jobs will disappear in the coming years.
To thrive in the age of the customer, winning companies will embrace four mutually reinforcing market imperatives in order to become a customer-obsessed company:
Many companies are developing and deploying mobile apps of all shapes and sizes. They are analysing the large amounts of data their systems already have about their customers and gathering even more. Not all companies are however taking a methodical and thorough approach to improving their customers’ experience.
Delta Air Lines recognized that improving customer experience – with a focus on eliminating cancelled flights – could make a world of difference in its business. Mobile apps for customers, flight attendants, and pilots streamline the experience for everyone. Making these applications sing required retooling back-end systems and led Delta to acquire staff and technology from travel technology firm Travelport. The result of this focus was a 13-point year-over-year jump in its Customer Experience Index score.
Does Cadillac compete with Chevrolet, Ford, and Volkswagen? Nicholas Dreystadt, the German-born service mechanic who took over Cadillac in the Great Depression years of the 1930s, answered: “Cadillac competes with diamonds and mink coats. The Cadillac customer does not buy ‘transportation’ but ‘status’.” This answer saved Cadillac, which was about to go under. Within two years or so, it made it into a major growth business despite the depression.
…flying planes or moving people?
Southwest Airlines chooses to ‘move people’
…selling gift cards or providing people with a means of expression?
Hallmark chooses to ‘provides people with a means of expression’
…selling phones or connecting people?
Apple chooses to ‘connect people’
…running theme parks or delivering joy to customers?
Disney chooses to ‘deliver joy’
…making cars or making joy?
BMW chooses to…
Michael Falcon makes a good point when comparing the methodical approach (and budget) companies often take to marketing but then have no structured approach to designing or delivering their customer’s experience. (bolding mine)
We don’t take the same methodical approach to customer experience as we do to marketing. As a marketing team, we collectively build campaigns, determine what type of digital and traditional programs we will use to deploy them, and allocate the portion of the budget that each will receive.
Customer experience needs the same methodical approach to be successful. However, customer experience doesn’t live within a single department like marketing does. To build a successful end-to-end customer experience program, you must include every single department within the company, from Marketing and PR to Operations and IT. Heck, even Accounts Payable has a role in delivering a seamless customer experience that will help make you an admired brand.
Michael goes on to highlight the seriousness that Rolls Royce take when building a new car arguing the same methodical hand-crafted approach should be taken when designing or delivering your own customer’s experience.
Building your customer experience plan is like designing a Rolls Royce. For the assembly of the car, a Rolls Royce is nearly all handmade; everything is tailor-made and personalized, from every single stitch down to the last screw. To build this machine, individuals from different areas of the business must seamlessly work together to bring this vehicle to life. The cost of the product speaks for itself.
Today, companies still believe that customer experience is customer service. They associate customer experience with more training. You can’t improve the customer experience simply by providing more training, although that is an element of it. Rather, it’s a structural design across all platforms and touch points.
Companies such as Ritz-Carlton and Disney have methodically designed their customer experience, just like building a luxury car, and charge a premium for it. Customer experience pays!
If you want to improve your end-to-end customer experience, you must receive the same amount of attention and, dare I say, budget as your PR and marketing functions do. It’s insane to me that companies pay thousands of dollars to hire PR or digital marketing agencies to create awareness of a service or product, when it will likely fail their customers because the experience hasn’t been designed to retain new customers.
And in the words of a wise man…
…if your company is going to last for the next 100 years, you must get your entire company aligned behind customer experience: design your program and strategically deploy the same experience you would want if you were the end customer of your business.
I’m currently reading The Essential Drucker, a collection of Drucker’s best works on management over six decades. Drucker is quite clear on what he believes the purpose of every business to be, what defines it, is at its core and where to start – from the Outside looking In! (bolding mine)
“The answer to the question, What is our business? Is the first responsibility of top management. With respect to the definition of business purpose and business mission, there is only one such focus, one starting point. It is the customer. The customer defines the business. To satisfy the customer is the mission and purpose of every business. The question, What is our business? Can, therefore, be answered only by looking at the business from the outside, from the point of view of the customer and market.”