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.
I am no longer a fan of customer-centricity nor customer-centric business. I am not a fan of the way many are going about customer focus, customer-centricity, or customer obsession. It occurs to me that the approach taken by many towards arriving at customer focus, customer-centricity, and customer obsession is not gold, it is fools gold.
Why? Because it occurs to me that an organisation that shows up as customer-centric does not centre itself on its customers. At least not in the simplistic sense that is being written-talked about, promoted and acted upon by many.
I get that I make a bold, even controversial statement, and it highly unlikely to win me applause. That is OK, given that my commitment is to write my truth and take a skeptical stance towards the dominant ideologies and practices.
I get that you might want to better understand why it is that I assert that which I assert here. Allow me to point at, illustrate, and unconceal that which I am getting at here by sharing with you some quotes. Let’s start with Emmy Van Deurzen, chartered counselling psychologist and registered existential psychotherapist:
…. one can never ignore the needs of others when making personal decisions but neither can one allow others to entirely determine oneself even when alone. This is a paradox.
Yes, you do need to consider customers – their needs, their desired outcomes, their ‘jobs-to-be-done’, their preferences etc. And you cannot run a successful business just by focussing on your customers. The game of business involves other players whose needs have to be considered. For example, a facet of business life caught my attention whilst working with smaller businesses, which had not so gripped me for most of my life working in big businesses. What facet? The critical importance of finding, hiring, organising, enabling, inspiring, channeling, and retaining the people who actually work inside the business to do that which is necessary to create value for customers. It occurs to me that this is just as important for big businesses, it is not so evident because the dysfunctions of a demotivated workforce don’t show up as vividly in a huge organisation. Or take a look at Zappos, its success is partly built on the way the founders and management team treated suppliers (as a valuable part of Zappos) and thus called forth co-operation from them.
Furthermore, if you simply follow what customers are telling you then you leave yourself open to the disruption caused by those who can see beyond what customers are saying in market research and customer surveys. Here, I share a passage from Matt Watkinson, the author of The Ten Principles Behind Great Customer Experiences:
It is not only consumers who have shifted towards other-directedness and ended up struggling: businesses have too. The dominant obsession with market intelligence, competitor analysis, and customer research is all about developing a more powerful radar, and the endless hand-wringing and strategising over social media betrays the kind of anxieties that are most often found in those eager for the approval of others.
In contrast, we most admire those businesses with a strong inner direction – a clear set of values, integrity and sense of purpose – and tend to lionise celebrity CEOs who bring that ethos to life…….. Customers churn between suppliers to find the best deal, not because we are all extremely price sensitive, but because there is nothing to be loyal to.
What Matt is pointing at here is that we are not simply the kind of beings that economics says we are. Nor are we the kind of beings that rationalist philosophy, behavioural psychology, and scientific management assumes that we are. The human being is a richer human being. A human being that strives for meaning and connection, open to being loyal to ideals, values, missions that elevate human life.
Finally, I want to leave you with wisdom from John Kay, an British economist:
If you want to go in one direction, the best route may involve going in another. This is the concept of ‘obliquity’: paradoxical as it sounds, many goals are more likely to be achieved when pursued indirectly. Whether overcoming geographical obstacles, winning decisive battles or meeting sales targets, history shows that oblique approaches are the most successful, especially in difficult terrain.
Obliquity is necessary because we live in an world of uncertainty and complexity; the problems we encounter aren’t always clear – and we often can’t pinpoint what our goals are anyway; circumstances change; people change – and are infuriatingly hard to predict; and direct approaches are often arrogant and unimaginative.
So let me remind you of my central assertion:
A customer-centric organisation does not centre itself on its customers. It is a paradox. And I say that it occurs to me that the way that many organisations are going about customer focus and customer-centricity, will not get them there. The path heavily promoted, and commonly taken, is fools gold.
Whilst I abhor combat, I do welcome conflict: conflict is simply the showing up of difference. And if difference is approached through the spirit of dialogue then it unconceals aspects of the world that are hidden from each of us. So if you disagree with that which I have written then please speak your mind, educate me, share that which you see and which I do not see. I wish you a great day and thank you for making the time to listen to my speaking.
I have been reflecting over 20+ years of experience centred on enabling, effecting, facilitating business change and improving business performance. During this time I have been involved with a whole range of management panaceas:
- business process re-engineering;
- management information systems;
- ERP systems;
- shared services
- knowledge management systems;
- kaizen, lean and six sigma;
- the internet;
- database marketing;
- permission marketing;
- relationship marketing;
- 1:1 marketing;
- customer relationship management;
- data mining and predictive analytics;
- organisational development;
- change management;
- leadership development;
- strategy and strategic planning;
- scenario planning;
- balanced scorecard;
- zero based budgeting;
- matrix organisations;
- customer experience;
- customer loyalty schemes;
- employee engagement;
- corporate social responsibility;
- social business;
- digital transformation …
What shoes up for me when I reflect on this experience?
I am present to the gulf between the promise of each of these ‘tools’ and the reality of that which showed up when these tools were introduced-applied in business settings. Rarely did the reality match up to the promise of these ‘tools’. Why? Were these ‘tools’ defective?
It occurs to me that few of these ‘tools’ are fundamentally flawed in themselves. The one that comes to mind is the area of knowledge management. There a huge gulf between information and knowledge. Knowledge management systems are great at holding information. They cannot ever hold-distribute knowledge. Knowledge is contextual, largely tacit and embodied. If you get this then you get that the premise of knowledge management systems is fundamentally flawed.
If most of these tools are sound then why has there been such a gap between the promise and the reality?
Take just one example: CRM. Why is it that whilst CRM systems have become essential part of the corporate infrastructure, they have not fulfilled on their promise: to drive marketing, sales and service effectiveness; and generate sound relationships thus contributing to higher revenues and profit margins?
Before I provide my answer to this question, I pose another question. Why is it that whilst so much is known about Steve Jobs (the way he went about doing what he did at Apple) there will never be another Steve Jobs? Why is it that you can copy Steve Jobs’ techniques and not generate the results that Steve Jobs generated? Why is it that pretty much all one needs to know about Zappos is widely available yet there is only one Zappos? For that matter, why is it that USAA is still in a league of its own?
Here’s my pointer to solving this riddle:
All we have is who we ‘are’, and this in turn shapes what we do. Being is sometimes though of as something intangible, abstract, or even ineffable, but it is actually quite real ….. Being is the context from which all of our thinking and actions spring, as opposed to doing, which is just a content that flows from the context.
Robert Hargrove, Masterful Coaching
The access to empowerment, customer-centricity, and innovation lies in being
Let me put this bluntly, the access to customer-centric organisations lies in being. Not in the ‘tools and techniques’ (the doing, the content). The same applies to cultivating a loyal, motivated, engaged, high performing workforce. And it is no different when it comes to innovation.
If empowerment, customer-centricity and innovation is not your being then all the ‘tools and techniques’ will make little difference. On the other hand if empowerment, customer-centricity, and innovation are your being then you will find or create all the ‘tools and techniques’ that you need as you need them.
There are people in leadership positions whose being is in tune with talk of enlightened leadership, customer focus, and empowerment. I dedicate this post to my friend Lonnie Mayne. I am clear that Lonnie’s being is a clearing for the best of our humanity and our greatness to show up. And as such I find Lonnie to be a source of inspiration.
Is Customer Experience just fluff?
Is all this talk of customer service, customer-centricity and customer experience merely fluff? That is the question that someone put to me recently. Allow me to answer that question from a practical perspective – lived experience at the coal face.
Imagine you are in this situation
Imagine that you review your Top 10 accounts and find that one of these accounts has been one of your longest customers. And this customer makes up a significant portion of your revenues and profits. You are grateful for the contribution that this customer makes to your business. And you have a problem to deal with and a decision to make.
Looking into this customer it occurs to you that if you can persuade this customer to move from their existing solution to one of your latest solutions you can cut the customer’s monthly bill by half. The cost of doing this is obvious: substantial loss in revenue and profitability. The benefit? There is no obvious benefit. So the question is what to do? Should you leave the situation as it is and hope for the best? Or do you choose to contact the customer and spell out how the customer can save money?
Being unsure about what to do you consult with your customer strategy consultant. Together you look more deeply at the situation and you come up with following:
1. The customer got a significant saving when the customer switched to your business many years ago. Since then the market has changed mainly through new technology that has made available lower cost solutions.
2. The customer has not complained nor asked you to come in and give advice on how to save costs or help decide which solution best meets the customer’s needs.
3. The customer is ‘out of contract’ and has been for sometime now. You are not sure that the customer even knows that this is the case.
4. Another supplier could approach this customer and offer to cut the customer’s costs by half. If that were to happen then you might lose this customer. Or you might have to re-bid for the business to keep it.
5. Right now your business needs as much revenue and profit as it can produce. And talking to this customer and offering a solution that cuts billings by 50% does not show up as smart. You are not sure the Finance Director will support such a move.
What choice would you make?
Given this information, what is the smart thing to do? What is the right thing to do? What would you do if you were the CEO of this business?
Are you tempted to continue just as you are? Are you tempted to let things be? Are you tempted to take the least risky route? Are you tempted to do that which shows up as being the least hassle, and the most comfortable course of action?
Would you say to yourself something like “Now is not a good time to make revenue and profit sacrifices. Besides the customer is responsible for looking after his own interest and finding the best solution for his needs. In any case the customer has not made any complaints or asked for any price reductions which means that the customer is happy. It’s best to leave things as they are. I am sure that we can match the offer any other supplier makes. I’ll cross that bridge when I come to it.”?
Context-structure drives behaviour: why there is plenty of talk and little real action
Now you know how it is that there is so much talk about customer-centricity, customer relationships, customer experience, customer service, and customer obsession and so little real-effective action. Now you know what Robert Fritz is pointing at when he says “Structure drives behaviour”. Put differently, we are always embedded in a specific context-situation and this context-situation has powerful impact on the choices we make. To go against the prevailing context-situation requires profound courage especially when you have taken over and are running a sound established business. You do not want to be the one that fails and is ridiculed, the one that loses his reputation, his status.
Please note that rather than blame people – Tops, Middles, Bottoms – it is more ‘profitable’ to look at the context-situation that is shaping the behaviour of Tops, Middles, and Bottoms. And it is true that Tops have more leverage over influencing-shaping changes, even transforming, the context-situation and thus enabling breakthroughs in performance.
The critical importance of courage: daring to be different, to take the road less travelled
Some do put courage into the game of business and life. They are the ones, if successful, build great companies. Look behind the scenes of customer experience exemplars (John Lewis, USAA, Amazon, Zappos, Apple, Zane’s Cycles) and you will find one or more people that went against the taken for granted rules of the game.
What is the cost of putting profits before customer interests?
This week one of the UK’s largest insurance brokers got hit with a £7.4m fine. Why? This is what Tracey McDermott, the FCA’s director of enforcement and financial crime, is reported to have said:
Swinton failed its customers. When selling monthly add-on policies, Swinton did not place the consumer at the heart of its business. Instead it prioritised profit.
At the FCA we have been clear in our expectation that firms must behave in the interests of consumers. Today’s outcome shows our approach in action and will act as a deterrent for other firms tempted to put profit figures above the fair treatment of customers.
The Dark Side of Customer Experience
Is Swinton the only organisation where people in the business put revenue and profits ahead of treating
customers fairly?Not according to Monique Reece:
The dark side of customer experience is the way in which some companies take advantage of their most loyalcustomers. For example, if you are a loyal cable subscriber, you may very well be paying more for your service than a new customer who just got a deal for switching carriers. Or if you are a magazine subscriber, you might asked to renew your subscription at a much higher price than if you just let the subscription lapse and subscribed as a new customer.
Dark patterns: carefully crafted user interfaces that trick users
Is the limit of the dark arts that companies use to fleece customers? Here’s what Michael Hinshaw says in a recent post of his:
According to darkpatterns.org, a dark pattern is “a type of user interface that has been carefully crafted to trick users into doing things.” Put another way, firms that employ dark patterns trick their customers into buying/signing up for things they almost certainly don’t want.
It can be as egregious as getting rental car customers to buy insurance they don’t want or need, or signing up for recurring shipments, billed monthly, when all they want is a single purchase…..You get the drift. Dark patterns get customers to do things they wouldn’t typically choose to do, if they were presented the options in a straightforward manner.
What does Michael Hinshaw recommend? He recommends finding the source of these “bad profits” and taking the necessary action:
So, ask yourself: does your company ever try to “trick” your customers? If the answer is yes, put up your hand and “out” the practice, pushing your firm to do something, well, better. There’s always an alternative to using dark patterns.
Is customer focus the antidote to these dark practices?
Time and again I have called attention to the ‘extraction’ context that lies hidden underneath the content of customer relationships, CRM, customer focus, customer experience, and customer-centricity. And it has occurred to me that I have been a lone voice spoiling the customer love fest. Not anymore.
I share with you selected passages from Bruce Kasanoff’s latest post which shows up for me as being the best post I have ever read when it comes to customer focus and/or customer-centric business:
The vast majority of “customer-focused” initiatives reek of a taker mindset.…. They do not think of customers’ interests first. They do not give major new benefits or services to customers. They seek to take more money out of people’s wallets.
In short, these initiatives were designed by takers, and if you are a giver it is enormously frustrating to deal with the hypocrisy that surrounds you: your company says it wants to help customers, but its policies and procedures are designed to take from customers, not give to them.
The taking mentality creates systems that make it so hard for customers to stand up for themselves that it’s easy for companies to “legally” lie, cheat and steal from them.
Putting takers in charge of customer experience is like asking a bear to guard your honey.
If you really, truly want to grow your company faster than your competitors, hire, promote and empower givers.
Givers are people who think of other people before they think of themselves. They are the people who should be designing and running customer-focused initiatives. They are the folks who have the vision and ability to grow revenues, because they are focused on the needs of others.
As I have said before, an authentic shift towards customer-centric business requires a genuine shift in consciousness. A shift from a “You OR Me” context to a “You AND Me” context. A shift from shareholder capitalism to conscious (stakeholder) capitalism. A shift from maximising short-term profits (at the expense of people and planets) to maximising long term wellbeing for all. A shift from calculating mind towards a generous heart. A shift from taking-keeping-excluding to giving-sharing-including.
What do you say?