Is this the access to profitable revenues, loyal customers and enduring success? (Part I)

Being a physics graduate I value an insightful theory that opens up new domains of enquiry and provides access to breakthroughs in performance.  Now and then I come across a business author who nails it, who provide such a theory.  It occurs to me that Clayton Christensen nails the essence of the customer-centric approach to doing business. And it just happens to be at the core of my consulting work.  Let’s start.

Do you have a deep understanding of what problems customers are trying to solve?

Let’s start with a truth that is so neglected. When I say neglected, I am not saying that you have not heard this truth.  I am clear that many of you will have heard of it – most likely it is a platitude.  And that is the very reason that this truth is not taken to heart, not lived, not given life in the world of business.  What truth?  This is what Clayton Christensen says in his marvellous book How Will You Measure Your Life?(bolding is my work):

“Many products fail because companies develop them from the wrong perspective.  Companies focus too much on what they want to sell their customers, rather than what those customers really need. What’s missing is empathy: a deep understanding of what problems customers are trying to solve.  The same is true of our relationships: we go into them thinking about what we want rather than what is important to the other person.  Changing your perspective is a powerful way to deepen your relationships.”

Why does this passage speak to me? It is my experience. Time after time in my consulting work I am struck by the truth of this understanding.  A lack of empathy and understanding for the customer as a human being who becomes a customer of the organisation in order to ‘hire’ that organisation – through its people and ‘products’ – to get a job that matters, done.

What can we learn from IKEA?

IKEA is an incredibly successful discount furniture retailer.  It has been in business for over 40 years, it has global revenues in excess of 25 billion euros and Ingvar Kamprad (the owner) is one of the richest men in the world.  The success of IKEA is not based on secret formulas, intellectual property, nor barriers to entry. So why is it that nobody has successfully copied IKEA?  This is what Clayton Christensen says (bolding is my work):

IKEA’s entire business model – the shopping experience, the layout of the store, the design of the products and the way they are packaged – is very different from the standard furniture store.  Most retailers are organised around a customer segment, or a type of product….

IKEA has taken a totally different approach. Rather than organising themselves around the characterisation of particular customers or products, IKEA is structured around a job that customers periodically need to get done.

The “job to be done” as a source of innovation, growth and competitive success?

Let’s continue listening to the wisdom of Clayton Christensen:

Through my research on innovation ….. my colleagues and I have developed a theory about this approach to marketing and product development, which we call the “job to be done”. The insight behind this way of thinking is that what causes us to buy a product or service is that we actually hire products to do jobs for us.

We don’t go through life conforming to particular demographic segments: nobody buys a product because he is an eighteen to thirty five year old white male getting a college degree. That may be correlated with a decision to buy this product instead of that one, but it doesn’t cause us to buy anything. Instead, periodically we find that some job has arisen in our lives that we need to do, and we then find some way to get it done.  If a company has developed a product or service to do the job well, we buy, or “hire” it, to do the job.

The mechanism that causes us to buy a product is “I have a job I need to get done, and this is going to help me do it.

So if you are going to segment your customers then segment them by the jobs that they “hire” you for. Here, I want to point out that you can use this “jobs to be done” approach for all customer touchpoints.  For example, what jobs do your customers hire your call-centre for?  What jobs do they hire your website for?  What do they hire your facebook page for?

Back to what we can learn from IKEA? 

Having set out his theory, Clayton Christensen returns to IKEA and explains the cause of its success as follows:

IKEA doesn’t focus on selling a particular type of furniture to any particular demographically defined group of consumers. Rather, it focuses on a job that many consumers confront quite often as they establish themselves and their families in new surroundings: I’ve got to get this place furnished tomorrow, because the next day I have to show up at work. Competitors can copy IKEA’s products. Competitors can even copy IKEA’s layout. But what nobody has done is copy the way IKEA has integrated its products and its layout.

This thoughtful combination allows shoppers to quickly get everything done at once….. In fact, because IKEA does the job so well, many of its customers have developed an intense loyalty to its products.

What is the lesson according to Clayton Christensen?

He sums it up well and find me in total agreement:

When a company understands the jobs that arise in people’s lives, and then develops products and the accompanying experiences required in purchasing and using the product to do the job perfectly, it causes customers to instinctively “pull” the product into their lives whenever the job arises. But when a company simply makes a product that other companies also can make – and is a product that can do lots of jobs but none of them well – it will find that customers are rarely loyal to one product versus another. They will switch in a heartbeat when an alternative goes on sale. 

I will continue the conversation around the ‘jobs to be done’ approach of doing business and creating superior value – for the customers and your business – in the next post in this series.

Honda & Jaguar: customer experience, management and organisational effectiveness

There is a pervasive assumption that management (managers and the control oriented practices that they put in place) – is useful and necessary.  And that the issues to do with the customer experience and organisational effectiveness centre in the people who work in the organisation – the employees. The specific issue being that these ‘lowly employees’ have to ‘whipped into shape’ and once they are then all will be fine.  That is the assumption that I  challenge in this post.  I say management is the true root cause of poor customer experience and organisational ineffectiveness.  If that interests you then read on, if it doesn’t then go and do something that does – life is too short to do that which does not inspire you.

Why am I delighted to be in possession of my Honda Accord?

Trusted Honda AccordThis week I drove up to Preston (in a Jaguar) to take possession of this beauty.  It is a Honda Accord, it is 12 years old, it has done over 172,000 miles.  And it works marvellously; my latest annual service/MOT/repair bill came to £250.  OK, my brother is rather generous to me, so I’ll double it to £500.

Why is it that I love this car?  Because it works consistently.  Because it is easy to fix – just about any mechanic can fix it without specialist tools or diagnostic computers.  Because, my annual service/repair bill is around £250.

Put differently, in building this car Honda has put in technology that works.  And this is not the only car for which this applies.  I also drive a 1995 Honda Accord Estate which works perfectly, consistently!  And is easy/cheap to service.

Why is it that these ‘old’ Honda Accords work so well?  The simple answer is that Honda designed/built these Accords such that they work and as such are reliable.  Dive into it deeper and you will find that Honda put their time and effort in the technology and functioning of the car and not the look & feel.  Put differently, Honda put workability and performance before looks.  I find it interesting that Honda prides itself on its technology and that is what it emphasizes.  I also find it interesting that Honda cars are consistently at the top of reliability tables.

To sum up, I love this Honda Accord because it shows up as a trusted friend.  It does the job that I hire it to do: get me from A to B, reliably and with no fuss.  And, like a good friend it is low maintenance – it is easy/cheap to keep in good shape.  Which is why I have stuck with it for such a long time.  It also happens that this Honda Accord has a bigger-older-more powerful brother that shows up in exactly the same way.  And that is why I like the Honda brand: in my world Honda shows up as a company that makes cars that work, reliably and relatively cheaply.  True, driving a Honda does not confer status.  And that suits me just fine as I am not that into status.

Why was I happy to hand the Jaguar back?

For a little while I was driving a Jaguar.  At the start I loved driving it: it was more spacious, the driver’s seat showed up more comfortable, I could adjust the steering while such as to get a more comfortable driving position, my kids loved the look/feel of the car and truth be told it did grow on me…  Then this great customer experience fell off a cliff: from great to poor.  How/why?

I had just parked the Jaguar and switched off the engine whilst I waited for my son to return from the shops.  When he did, the Jaguar would not start.  Listening to the noise I was clear that there was nothing wrong with the battery.  And I knew that there could not be anything wrong with the spark plugs etc – because my brother had serviced it a week or so before.  I tried again, then again, then again.  The engine management light was on and the car just would not start!  So I called the AA out.  Half an hour later, I tried again and the Jaguar started perfectly.  And I cancelled the AA patrol.

Next day, it is the morning and I have somewhere to get to.  What happened?  The Jaguar didn’t start.   I waited a little while and tried again – no luck.  Forty minutes Vince from the AA turned up.  What happened?  He sat in the driver’s seat, turned the key and viola – the Jaguar started perfectly.  So Vince plugged in the diagnostics (as the engine management light was on) and there were some 7 faults.  He cleared 5 of them easily – something to do with some “software” in the engine management system being out of date.  That left two faults, which turned out to be the same fault – an O2 sensor playing up.  And Vince advised me to take the car in and get it sorted out.  Which is exactly what I did.

A day or so later I took possession of the ‘sorted out’ Jaguar – one without the engine management light on.  And the car started straight away and continue to work fine for several days.  It was the evening, I had to take my son to his Karate, and once again the Jaguar didn’t start.  The issue?  the engine management light!

The customer experience lesson is straight forward and I fear not sufficiently understood/grasped.  ‘Design’, as in the look and feel is great as long as it compliments the proper functioning of the ‘product’.  Why?  Because customers hire ‘products’ to do jobs.  Put differently, you don’t look cool nor have high status in a Jaguar if the damn thing does not start.  You show up as a fool – for yourself and for others!  Which is my way of saying that designing the customer experience starts with being clear about the core job/s that customers hire your product to do.  And ensuring that your product does those jobs.  That is the core of the customer experience.  That is the customer experience that drives advocacy and loyalty.  Everything else is a making it easy/fun for your customers to get to, learn about, experience and buy your ‘product’.  That matters but only as long as you have put forth a product that is worth getting to, learning about, experiencing and buying!

Lets, turn our attention to management, control and effectiveness

What can we learn about management from my experience with the Honda’s and the Jaguar?

Getting present to my experience it occurred to me that the Honda Accords I drive do not have sophisticated engine management systems (and the associated sensors) to monitor and control the functioning of the car.  What there is, is the ‘car itself’.  And Honda designed the ‘car itself’ to work by paying attention to the ‘technology’ that gives being to that car.  This attention is in the form of: using the right technology – that is robust/reliable over the longer term; and taking pains to ensure that the various technologies work together in harmony.  Given that, Honda did not need to put in place a sophisticated engine management system.  Put differently, and this is the key point: the Honda cars have less management.  They have (and need) less management because the ‘car itself’ was designed right – to work, to be reliable – to not need management!

Now compare that with Jaguar.  What is stopping the car from starting consistently?  Management in the form of the engine management system.  Look, there is not an issue in the ‘car itself’: when the engine management system lets the Jaguar start, the Jaguar starts and works perfectly – short and long distances.  My brother has confirmed that the ‘car itself’ is fine, it is the O2 sensor that is playing up and needs to be replaced.  Put differently, it is management itself (the engine management system) that is degrading workability and performance of the Jaguar.  I say that if Jaguar had focussed on the ‘car itself – designing it to be robust and reliable – then Jaguar would not have needed to put in such a sophisticated engine management system.  Which is my way of saying that Jaguar have taken the traditional short cut: too much reliance on control because of lack of ‘quality’ built into the design of the ‘car itself’.

Which brings me to the central point: stop focussing exclusively on the employees (‘the car itself’) and focus also on managers and management.  Put bluntly, the root cause of poor customer experience and poor organisational functioning is often the managers and the management practices that they enact.  Managers whose ‘map of the territory’ is mismatched with the territory that they put in place and enact practices that degrade the workability and performance of the organisation.  In the same way that the O2 sensor in the Jaguar provided a distorted ‘map of the territory’ to the engine management system which enacted a fault practice ‘stop the engine starting’.  I believe my thinking here is in alignment with Gary Hamel – the management ‘guru’ who says the biggest issues in organisations is management.

My next big point is this – and this goes with the former point as they complement/work together –  design your organisation so that it works without management control and oversight!   That is right.  Put in place a context that draws the right people to show up in your organisation and behave in the right way by themselves, of their own accord.  That is to say that the purpose and values are the music that call forth the right type of dance.  And signal to all when one or more people are dancing the wrong dance – a dance that does not fit the music.  If you have doubts I ask you this: does the CEO, the management team, have a more intimate understanding of the customer or the people who interact daily with customers – speaking to them, listening to them, selling to the, serving them?  And who has the best grasp of what really does and does not work within the organisation: management who are divorced from actual work or the people who do the work?  Finally, who has the best insight into what they could accomplish if they put their hearts into it: the people who do the work or the managers?

Summing up

Create a context and design an organisation that does not require managers and management.  Instead create a context and design an organsiation that works by itself – because that is simply what goes with the design.  And from time to time ‘service/repair’ the organisational context and design to ensure that all is in alignment with the mission and values. Robert Greenleaf coined the term ‘servant leadership’- itt is not quite what I am pointing at and yet it is pointing towards the right direction.

What do you say?