Customer-Centric Leadership: What Can We Learn From Jeff Bezos?

Jeff Bezos and Amazon have been in the news courtesy of Bezos latest letter to shareholders. If you have any interest in what constitutes a customer-centric orientation then I throughly recommend that you print out this letter and read it. If you are up for creating a customer-centric organisation then I recommend that you read this letter every day.

Annette Franz on Jeff Bezos and Customer Experience

Annette Franz over at CX Journey has a written an enthusiastic post referring to Jeff Bezos as a CX dream come true!. I recommend reading it, and I share one particular part of her post with you:

As a leader, Mr. Bezos shows that he’s both the customer and the employee champion. Reading through the 2012 letter again, the following traits and qualities come to mind – all of which are certainly descriptive of a customer-centric culture:

  • Trust
  • Transparency
  • Best interest of customers
  • Integrity
  • Honesty
  • Not being opportunistic
  • Customers ahead of shareholders
  • Innovation
  • Passionate
  • Humble
  • Proactive
  • Delight

Do any of those describe your organization’s values and culture?

Bruce Temkin on Amazon and the customer-centric blueprint

Bruce Temkin says that Bezos letter describes Amazon’s customer-centric blueprint.  Bruce picks up on Bezos strategy of making investments and sacrifices today (to benefit customers) knowing that some of these will pay of in the long term.  There is one particular paragraph from Bruce’s post that I share with you here as I say it goes to the heart of the customer-centric orientation (bolding is my work):

Bezos understands the value of Amazon’s most critical asset, customer loyalty, which I’ve defined as the willingness to consider, trust, and forgive. That focus is what put on the top of the retail sector in the 2013 Temkin Experience RatingsGreat leaders focus on building that customer loyalty asset with the knowledge that it will generate the best returns for all stakeholders in the long run.

My take on Jeff Bezos, Amazon and the customer-centric orientation

I say that the core of authentic customer-centricity is a relentless ongoing commitment to creating compelling value for customers. What does Jeff Bezos say?  Here is an extract from his 1997 letter (highlighting is my work):

From the beginning, our focus has been on offering our customers compelling value….. we set out to offer customers something they simply could not get any other way, and began serving them with books. We brought them much more selection than was possible in a physical store, and presented it in a useful, easy-to-search, and easy-to-browse format in a store open 365 days a year, 24 hours a day. We maintained a dogged focus on improving the shopping experience, and in 1997 substantially enhanced our store. We now offer customers gift certificates, 1-ClickSM shopping, and vastly more reviews, content, browsing options, and recommendation features. We dramatically lowered prices, further increasing customer value. 

But we are not in 1997 and Amazon is now the gorilla of the online space not an upstart, a revolutionary.  So lets take a look at the present situation.  I say the real test of authentic customer-centricity is what you do when you have arrived, when you dominate the marketplace.  I have worked with many large successful organisations. Again and again I have seen these organisations ‘squeeze’ the customer and take ‘advantage’ of the customer’s trust or the customers weakness to maximise profits.  Has Amazon fallen into this trap?  Here are two paragraphs from the April 2013 letter:

When you pre-order something from Amazon, we guarantee you the lowest price offered by us between your order time and the end of the day of the release date…….. Most customers are too busy themselves to monitor the price of an item after they pre-order it, and our policy could be to require the customer to contact us and ask for the refund. Doing it proactively is more expensive for us, but it also surprises, delights, and earns trust.

In 2012, AWS [Amazon Web Services] announced 159 new features and services……. AWS Trusted Advisor monitors customer configurations, compares them to known best practices, and then notifies customers where opportunities exist to improve performance, enhance security, or save money. Yes, we are actively telling customers they’re paying us more than they need to. In the last 90 days, customers have saved millions of dollars through Trusted Advisor, and the service is only getting started. All of this progress comes in the context of AWS being the widely recognized leader in its area – a situation where you might worry that external motivation could fail. On the other hand, internal motivation – the drive to get the customer to say “Wow” – keeps the pace of innovation fast.

Why has Amazon bucked the trend here?  Why is Amazon not exploiting its dominant position?  Why is Amazon not extracting value from its customer relationships to maximise short-term profits and drive up the share price?

My answer is that Bezos is not playing the profit maximisation game.  I say that he is playing “maximise service not profits” game and as such he has built a culture and management doctrine that drives the appropriate thinking and behaviour.  Here’s what Jeff Bezos say in his l2013 letter:

One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. We think this approach earns more trust with customers and drives rapid improvements in customer experience – importantly – even in those areas where we are already the leader.

I say there is value in simplicity. I say that there is value in exceeding customer expectations. I say that one of the best ways of exceeding customer expectations is to give customers more than they expect. I say that customers expect companies to play dirty and take advantage. I say a sure route to delighting customers is not to do this and instead treat people right.  What does Jeff Bezos say?

To me, trying to dole out improvements in a just-in-time fashion would be too clever by half. It would be risky in a world as fast-moving as the one we all live in. More fundamentally, I think long-term thinking squares the circle. Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.

In amidst all this content it is easy to miss what really matters: the context.  So let’s just take a look at the context.  Between the 1997 letter and the 2013 letter, a span of 15+ years, there has been consistency:

  • Leadership: Jeff Bezos continues to be in charge
  • Focus: creating compelling value for customers
  • Strategy: take calculated risks, innovate, invest today to create value for customers and look for payoff in terms of customer loyalty and market leadership in the longer run
  • Management doctrine: the fundamental pillars of the management doctrine are set-out in the 1997 letter.

When is it appropriate to favour the customer experience over profits?

Harley Manning: You should never put the customer experience ahead of profits

According to Harley Manning of Forrester, the answer to the question “When should you favor customer experience over profits?” is “Never!  In his post Harley recounts the following:

After some preamble about the pressures his company was under to increase revenue and profits, he asked, “Given that, when should we put aside the need for profits and fund customer experience projects instead?”

His question surprised me. And I clearly surprised him when I responded, “Never.” I let that hang in the air for a moment so it could sink in. Then I added, “You should never put aside the need for profits when you fund customer experience projects.”

I could see that people were a little confused so I went on. “You should only fund customer experience projects that will produce profits. That’s why you do those projects in the first place. And if you have other kinds of projects that will produce better business results, do them instead. But if you take the time to create the business models for your CX projects you’ll probably find that they’ll produce better ROI than most of the initiatives they’re competing against.”

Does Jeff Bezos agree with Harley Manning’s take on customer experience and profits?

As soon as I read this post by Harley Manning the following thought came to mind: what about Jeff Bezos and Amazon?  It occurred to me that Jeff Bezos has consistently sacrificed short-term profits in order to attain the long term leadership.  And how has he gone about attaining that leadership? By focussing on creating compelling value for the customer.  And what is a key ingredient of this compelling value?  The customer experience.

If you doubt my words then read the following post: 6 Things Jeff Bezos Knew Back in 1997 That Made Amazon a Gorilla.  Here is one particularly relevant part of this post:

Bezos: It does fit into my view. Our first shareholder letter, in 1997, was entitled, “It’s all about the long term.” If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue. At Amazon we like things to work in five to seven years. We’re willing to plant seeds, let them grow—and we’re very stubborn. We say we’re stubborn on vision and flexible on details.

In some cases, things are inevitable. The hard part is that you don’t know how long it might take, but you know it will happen if you’re patient enough. Ebooks had to happen. Infrastructure web services had to happen. So you can do these things with conviction if you are long-term-oriented and patient.

When is it appropriate to favour the customer experience over profits? 

There is no simple answer to this question. Why?  First, one has to be clear that there are all kinds of profits.  There are this years profits. There are the profits that will be made in the next three years. And if you are Jeff Bezos you are thinking about the profits that will be made over the next seven years. If you are Toyota you might just be looking out 20+years.

Second, there is the matter of what falls under the umbrella term of ‘Customer Experience’.  Some, possibly like Harley Manning, see it simply as customer interaction management – how the customer is treated at various touchpoints along the customer journey.  Others, like me, include the brand (as in reputation not marketing messaging) and the core product under the Customer Experience umbrella.

Where do I stand on this?  My answer is “It depends!” What does it depend upon?  It depends on you and your circumstances. Do you have the leeway to play the long-term game?  Then I say make the short-term sacrifice and go for long-term market leadership.  If you do not have that leeway then you have to follow Harley Manning’s advice.  And in doing so you will leave open the door to the likes of Jeff Bezos – the disruptors. Which is great because progress relies on disruptors to shaky up things up and create ‘new value’ for customers.

Want a breakthrough in customer-centricity? CARE, deeply

In the West we are taken with that which is visible (the surface phenomena that can be detected and measured) that we lose sight of that which gives rise to the visible (the invisible).  In my last post I disclosed one aspect (Integrity) of the invisible that makes a huge difference to the workability and performance of our lives, our organisations and the impact (customer experience, loyalty or otherwise) we make on customers.  In this post I want to look at another dimension that is critical – to workability, performance and experience – and which is hidden from view and often neglected in organisations: CARING.

CARING is an invisible quality that we bring or do not bring to everything that we do – from something as simple as saying hello to something as complex as creating a harmonious prosperous society – as individuals, as groups, as communities, as organisations and societies.  There is noticeable difference in QUALITY in the level of caring behind a simple “Hello”.  That difference in quality is picked up and experienced by the Customer.  This difference is also present for the person who is communicating with / being of service to the Customer.

The CARING (or the lack of it) that has been put into the design of an office building in present – as an experience – even if this experience cannot be expressed adequately verbally and often it cannot:  the people working in the building know if they are cared for or not.   The CARING (or the lack of it) that has gone into designing and manufacturing products is experienced by the people who touch and are touched (or not) by these products.  The CARING (or the lack of it)  is present in the design of websites – some websites occurs as being useful, easily usable and even inspiring at a deeper level and others do not have this experiential impact. CARING (or the lack of it) shows up in business policies – some policies give rise to phenomena that leave us (as employees, as partners, as suppliers, as customers) moved, touched and inspired so much so that we find ourselves thankful that these organisations exist and we willingly give our loyalty without thinking about giving our loyalty: loyalty simply shows up without conscious effort or decision making.  The CARING (or lack of it) is experienced through the business processes – some make it easy for the Customer to get his jobs done, others make it difficult – even impossible.  The CARING (or lack of it) shows up in the technology that is implemented and how it is implemented.  The people and organisations that CARE ensure that self-service technology is easy to use, that it makes customer lives simpler, richer, easier and they take the time and make the effort to educate/train customers in using that technology.  Many people and organisations do not CARE enough and so use technology badly – the technology occurs as a pain for customers and often staff.  Just go and take a look at the technology that many call-centre agents have to use under intense time pressure – most of it makes the lives of the call-centre agents hard and stressful rather than help them to do their job quickly and professionally.

When CARING is being put into the game of business it shows up in the form of policies, products, service, solutions, processes, technology, people etc.  When CARING shows up in phenomena it is picked up and experienced by: all the people in the business (leaders, managers, back office staff, front office staff); all the people who serve/supply the business; and all the people who interact with and buy from the business.  When CARING is experienced by Customers then ‘customer loyalty’ simply shows up: customers find themselves being loyal (as evidenced by their behaviour) without any thinking on their part on whether to be loyal or not.  Customers are people – not rational machines – and they are hard wired to behave in certain ways.  As human beings living in a uncertain (even dangerous world) we want to / need to believe that we live in a benevolent world.  CARING shows up as phenomena (e.g. keeping promises,  products that do what it says on the tin, apologies and restitution for poor service….) that make us feel that we live in that benevolent world – something that we want so much. Don’t believe me?  Take a moment and experience what your living would be like if you were not able to trust anyone and really did not know what was around the corner – no certainty and danger everywhere.  How long would you want to live like that?  What would your stress levels be like?  What would it be like – the experience – of being around you?  How rapidly would you age?  How long would you live?  What would be the quality of your life? I doubt if it would be anything other that wretched.  CARE is the difference between a wretched and a joyous existence.

There is no escaping CARING.  As human beings we bringing CARING or the lack of caring to everything – absolutely everything.  And that CARING shows up in all the phenomena that we can experience with our five senses and with our sixth sense – sensing what we sense but without being able to put our finger on it and certainly we cannot point to the commonly agreed upon five senses.

If you want to breakthrough in customer-centricity then CARE deeply.  Who can I point you towards so that you can see what I am pointing towards.  Steve Jobs – he cared deeply about ‘putting a dent in the universe’ and about ‘the customer experience’, beauty, simplicity, flow and great design.  He cared so deeply that he refused to compromise – to go with second best even if that would have been more than enough for staff, distributors, customers, the industry pundits, the stock market.  Jeff Bezos – he is stated that his intent is to make Amazon the earths most customer-centric company.  He means it and to that end he plays the long game – making sacrifices today – again and again – to act in accordance with and realise his dream, his intent.  Tony Hsieh – his intent is captured in the simple saying ‘Delivering Happiness’.  Chris Zane of  Zane’s Cycles – read “Reinventing The Wheel” and you get clear that Chris CARES deeply about: the community he lives in, the customers he serves, the people that work for him……James Dyson – cared deeply enough about his ideas for the vacuum cleaner that he risked everything and many years in inventing the bagless vacuum cleaner and today his business is a roaring success. Julian Richer of Richer Sounds cares deeply about what the business is about (the products, the service, the people who serve the customers, the customers themselves) and so Richer Sounds has some of the highest sales figures per square foot of retail space and more and more Richer Sounds stores blossom over the UK.

Do you CARE so deeply that anything less than perfection leaves you feel dissatisfied, in pain?  If not then you do not CARE deeply enough and that means that the arena is wide open for someone that does to reinvent the ‘playing field’ and thrive – most likely at your expense.

Hint:  you cannot CARE deeply enough about a product, a proposition, a mission, an organisation that you are not proud of.  That is simply what is so:  at best you will operate at the minimum level that you need to get by.

What do you think?  Heck if you disagree or you have a different point of view then share it with me – educate me, I am open to being challenged and educated.