Taking a Deeper Looking at the Customer-Centric Ideology

In response to an earlier post (The Paradox At The Heart of Customer-Centric Business) Christopher Frawley commented:

Maz, your post is both intriguing and confusing. You’ve stated what you’re against, but I’m not sure that you’ve clearly articulated what you’re for. You do make the point about business being an ecosystem that’s larger than the customer and yes that’s true.

I would argue that the decisions you make about hiring, treating suppliers, revenue models, etc. are all in service to meeting and exceeding the needs of customers – the reason you have a business at all. All the questions about how the business operates should be answered through the lens of with what will help us do the best job for customers in the marketplace.

So many have awakened to the reality that more outward attention must be paid to the customer and you may consider much of what’s being said and done simplistic (as you stated). If a customer centric business does not center itself on its customers, then what if anything is at the center and/or what should it be? Thanks.

It occurs to me that Christopher makes good points and is asking questions worth asking.  So the least that I can do is make the effort to grapple with his questions and share that which shows up for me.

I say that all of us talk a lot of nonsense and mostly we are not present that it is nonsense. Why? Because we fall in with the customs and fashions of the day.  Whilst thoughts may show up for us, most of us rarely think.  It occurs to me that a lot of nonsense has been talked about in the Customer domain by those who have something to sell to those who buy the nonsense.

Is business about meeting and exceeding the needs of customers? 

Is it a God given commandment that the purpose of business is to meet-exceed the needs of customers? I haven’t seen it any of the holy books so it occurs to me the answer is no.  Perhaps a better question, given that we worship at the altar of science, is to ask if meeting-exceeding the needs of customers is a scientific law.  Can you and I agree that science has nothing to say on this matter, it is silent?

Which begs the question, who says that the reason you have a business at all is to meet-exceed the needs of customers?  In grappling with this question, I ask you to consider that the taken for granted view (embedded in company law in USA, UK) is that the duty of management is to run the business so as to maximise the returns to shareholders.  There is no mention of customers. There is no duty towards customers other than those duties imposed by consumer protection legislation. Do you not find it interesting that consumer legislations has been enacted to stop companies misleading even abusing customers?

Do entrepreneurs risk all so that they can meet-exceed customer expectations? I have had the privilege of working with some entrepreneurs. Based on that experience, it occurs to me that the answer is no. Some entrepreneurs start their businesses to escape the rat race. Others because they see an opportunity to make a lot of money.  From what I have read, Steve Jobs did it to ‘make a dent in the universe'; Jeff Bezos did it because he did not want to regret missing out on the possibilities created by the internet; Tony Hsieh did it because he loved building businesses; Chris Zane did what he did because he found himself good at fixing bicycles….

Back to the central question and let’s ask this question differently. What is the basis of the assertion that the reason you have a business at all is to meet-exceed the needs of customers?  The common answer is that it is the customer that pays the wages.  Let’s take this to mean that without customers there is no viable business.  Agreed.  Now consider this question.  What happens to a business if the people who work in the business all drop dead?  What happens if the employees get together and go on strike? Is this business a viable business? I say no.  If you think otherwise, then ask yourself why it is that USA and the UK governments and business establishment have sought to undermine unions and union power.

Let’s consider the energy companies in the UK. It is arguable whether they meet and exceed the needs of their customers. A fundamental need is for transparent pricing plans so that customers are in a position to make the right choices.  The energy companies have done and continue to do all they can to stop customers getting this need met.  These energy companies make huge profits by structuring the market to meet their needs – needs of top management and shareholders.

It occurs to me that business is as much about meeting-exceeding customer expectations as my life is about breathing, drinking and eating.  Which is my way of saying that in the same way that it is simplistic to reduce my life to breathing-drinking-eating, it is simplistic to reduce business to meeting-exceeding customer expectations.

You may disagree. In that case can you and I agree that I have shared with you sufficient grounds to at least question the God given status of the truth of the assertion ‘business is about meeting-exceeding customer expectations’?

Should all business questions be answered on the basis of what will help us to do the best job for customers?

To answer this question, it is worth getting present to something: customers don’t exist.  How to point this out more concretely? When i-you say “all business questions should be answered on the basis of what will help us to do the best job for customers” which customers are we talking about?  Are we talking about the customers which are most profitable for us?  The customers on which we are losing money?  The customers where it occurs to us we have the most potential to grow their wallet share with us?

In ‘Onwards: How Starbuck’s Fought for It’s Life without Losing It’s Soul’ Howard Schultz draws attention to the real world – the world of messiness.  Under the previous CEO, Starbucks had expanded rapidly to please Wall St.  When an analysis of the stores was done there were 100s of stores that were simply not viable. So the decision was taken to close these stores. What happened when customers of these stores found out? Some customers wrote in asking-pleading for the stores to be kept open. Why? Because the Starbucks store played such a central role in their lives.  What happened?  Howard and the team listened, did the maths, and closed the stores.

When the folks at Apple were playing around with the technologies that would eventually constitute the iPhone were they doing so in order to meet-exceed customer expectations?  Or was Steve vested in creating-building a phone that he enjoyed owning-using?  I wasn’t there so I do not know the definitive answer. The writers (that I have read) say that Steve was concerned with creating a phone that he and his family-friends would enjoy owning-using. The effect of succeeding in creating such a phone was that of exceeding customer expectations. Yet, it was not customer expectations that drove the investment, effort, or passionate commitment to creating the iPhone.

Then there is Clayton Christensen and his theory of disruptive innovation.  As I understand, Clayton Christensen makes the claim that successful companies become good even great at building a business around a highly profitable group of customers. And in the process they ignore other customers thus creating an opening for innovative disruptors. Consider Amazon, how is it that Amazon has become the giant of book retailing? I say it is in part because the incumbents were to busy answering question on the basis of their understanding, and investments, in doing the best job for customers who bought their books – the people who turned up, looked at and bought books in the store.

Can you and I agree that the game of business cannot be reduced to any simplistic formula. Including, ‘all business questions be answered on the basis of what will help us to do the best job for customers’?

What is my big issues with customer-centricity? 

Life is messy. Life is full of polarities, contradictions, and paradoxes.  Business is a realm of life and as such the game of business is messy, non-linear, full of polarities, contradictions and paradoxes.  This is not a realm in which simple minded thinking, simple minded formulas, and simple minded approaches are effective.  It occurs to me that too many of those working on customer focus, customer experience, and customer-centricity are falling into this simple minded trap.

Consider that the success of Amazon is as much on its ability to deliver the goods to the customer quickly as it is about its website.  And that Amazon lives by the principle ‘the best service is no service’ – ensuring that everything works just right so that there is no need for the customer to contact customer services.

Consider that the success and value of Apple is tied to the ability of its people to come up with ‘magic products’.  And Apple invests in on helping its customers make good use of these magic products. How many folks working on the customer experience even consider these two domains?

Consider that Ryanair has been hugely successful by enabling people who would not normally fly (as they could not afford flights on the likes of British Airways or Aer Lingus) to fly. It occurs to me that Ryanair is a great illustration of Clayton Christensen’s theory of disruption. By tapping this unmet need the folks at Ryanair have been getting away with treating their customers rather badly in terms of service, fairness, and charges.

Consider that Tesco was held out as the exemplar of taking a data driven, customer-centric approach to retailing. What is the case today?  Tesco has been struggling since the recession whilst the likes of Waitrose, Sainsburys, and Aldi are doing rather well.  So perhaps data driven retailing is not the magical formula for business success.

Consider that the John Lewis Partnership (John Lewis, Waitrose) have been growing from strength to strength – this is a business where the employees own the business and where their rights and obligations are enshrined in a legally binding constitution.

 

Posted on October 25, 2013, in CRM, Culture, Customer Experience, Customer Philosophy and tagged , , . Bookmark the permalink. 7 Comments.

  1. Maz, thanks for clarifying.

    In many ways what you say is similar to the argument about targets in government.

    Fixating on one issue is really not terribly helpful, the real wins come when you look at the whole.

    James

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    • Hello James,

      I find myself to be in agreement with you. It occurs to me that it is more useful to think of a business as the process of juggling many balls and ensuring they stay in the air, than to think of business as dart fired at the treble 20 on a dartboard.

      Maz

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  2. Maz, as you say a business can chose to serve a low-cost and thus low quality, little service market. That does it not make it bad at customer service. But the business has to follow through on its promise to be either cheapest or the best value.

    The best AND cheapest service is getting things (customer expectations versus perception) right the first time. It is never the most standard service performed by the cheapest possible staff that tags the customer along with ‘you are important to us’ messages and does nothing else.

    Businesses cannot be reduced to simple formulae- PERIOD! Which also means to simple and cheap processes. Business is purposeful collaboration and the business should be clear and honest about its purpose. Employees must be enabled to fulfill those promises. To say they are customer-focused and then focus on shareholder value is not right. The truth is you need all three — customers, employees and owners, but how well a business is doing is not reflected in its share price. Share price is nothing else than meeting analyst and therefore market expectations. How well a business is doing is purely reflected in how loyal its customers are. Loyal customers come from emotional attachement to people — service staff, a figurehead or even outside product advocates.

    But even then you have to be innovative. Blackberry purely relied on those loyal customers and missed that the market was going elsewhere. Most analysts look at the past and try to predict the future from it. That is why Steve Jobs hated focus groups or market research and never used them to plan. Microsoft did nothing else and look at the crap they produce. Like me you point out that Big Data means to look the wrong way — into the past.

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    • Hello Max,

      I find myself to be in agreement with you. There are many ways to do business and prosper. You can be low cost and do well. You can make great products and prosper. You can string products and services into a complete solution and prosper. You can put together a great online shopping experience and couple this with great logistics and prosper. You can provide great human service around a good enough ‘product’ and prosper.

      Yes, business cannot be reduced to a simple formula. In any case, the formula that works today, may not work that well tomorrow: RIM, Nokia, Tesco…..

      When it comes to innovation, I do not find myself to be in agreement with you. It occurs to me, based on experience and some reading, that experimentation (the source of innovation) is great at the level of population (society) and not necessarily great for the individual doing the experimentation. Put differently, we forget all the people who went for innovation, and failed. We remember only the Edisons, Jobs of the world. And as such we blindly advocate innovation – most who innovate will fail and lose just about everything in the process. Which is why innovation is a game played by the smaller-weaker players who have little to lose, everything to gain.

      All the best
      Maz

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      • HI Maz, yup – business is risky. There are no guaranteed formulae. A large business must allow experimentation and innovation to survive. Consulting companies promoted a domination strategy for monopolists – just buy anything that may turn into a competitor. If the innovation is then assimilated that is a valid form of progress. If it is suppressed then the business will fail, regardless.

        I do not advocate innovation, I think it is the natural way. Either you do or someone else will and will eventually take your place. But yes, many innovators fail. I wrote about it in this blog: http://isismjpucher.wordpress.com/2011/10/24/the-value-of-failure/

        My core message: Not failure is the outlier but success is. But if you avoid failure there simply won’t be any innovation! Period.

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  3. Adrian Swinscoe

    Hi Maz,
    I agree that there is no simple answer to this and to assume so is a mistake and a red herring. This is well illustrated by your examples that show there is no one simple answer to meeting a need in a market.

    However, the challenge seems to be is that many people are not willing or brave enough to go their own way and are looking for the shortcut, the ‘answer’.

    Adrian

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    • Hello Adrian,

      I find myself to be in agreement with you. It really takes something to strike out on one’s own. The default is to do what others do, look for the magic formula, take the shortcut ….

      Maz

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