Strategy: Forget The Customer and Focus on Purpose?

Is purpose the vital access to performance and the starting point of strategy?

What explains the variability in performance – revenues, profits, share prices – across firms who compete in the same industry? Why, for example, does IKEA do so well in the furniture industry when many other players struggle or have to accept modest performance?  Is the answer that IKEA is customer-centric and the other players are not?  Is it that IKEA delivers a superior customer experience?

Cynthia Montgomery in her book The Strategist explores this question and shares her answer.  She says:

Purpose is where performance differences start. Nothing else is more important to the survival and success of a firm than why it exists, and what otherwise unmet needs it intends to fill. It is the first and most important a strategist must answer. Every concept of strategy …… flows from purpose.

Will any kind of purpose do the job?  Is the purpose of making mountains of profit and enriching shareholders enough? Is the purpose of letting the lean folks loose so that all the processes can be streamlined and any joy, the comes with being social human beings, driven out of existence, enough?   Is it enough to simply be great at interacting with customers at the touchpoints that matter?  No, according to Cynthia Montgomery.

We hunger for purpose that lifts us up from the harshness and banality of the dog-eat-dog world of competition. And this includes the Tops:

Many of them want to feel that what they do matters in some context larger than themselves and larger even than their companies….

So is an inspiring, uplifting, purpose enough? Not according to Cynthia Montgomery. She says that purpose needs to do much more than inspire.

1. A good purpose ennobles 

You and I are are spiritual beings manifested in physical form. Whether we like it or not, in our quiet moments, we find ourselves called to answer questions concerned with meaning. What is life about? What is my life about? Am I leading a meaningful life?  Is this organisation and its mission worthy of me and all that I have to contribute?

In an age where 80% of employees are disengaged at work you can see the value of a noble purpose. A noble purpose inspires people in the organisation, it literally elevates and energizes.  Talking of IKEA, Cynthia Montgomery says:

The people at IKEA don’t believe they’re flogging cheap furniture. They believe they’re creating a “better everyday life” for the many people who can’t afford top-end furnishings.

Cynthia goes on to say that we should not overlook the vital role of purpose in calling forth and fostering the care and commitment that lead people to play full-out and generate good results.

I say that a good purpose ennobles more than the people inside your organisation. I say that a good purpose ennobles customers, ennobles distribution partners, ennobles suppliers, ennobles the community in which your organisation operates.

2. A good purpose forces choice and puts a stake in the ground

A good purpose forces choice: to stand for one set of values and not others; to do X and not Y; to be this and not be that.  Choosing is painful because it means letting go of some options. Choice is also critical because it enables focus. Here is what Cynthia says:

If your purpose does not preclude you from undertaking certain kinds of work, then it’s not a good purpose. Purpose, like strategy, is about choice, and real choice contains …… both positive (“We do this”) and negative )”By implication, then, we don’t do something else”) elements.

3. A good purpose sets you apart; it makes you distinct

A good purpose is not generic, it does not lead you to say “We are a training company” or “We are a telecommunications company” or “We are a marketing agency”.  A good purpose spells out the reasons for your existence, the people (customers) you have chosen to serve, the needs you have set out to meet, the contribution that you committed to making.  It is in these specifics that the purpose comes alive. Cynthia shares how IKEA describes its difference:

From the beginning, IKEA has taken a different path ….. It’s not difficult to manufacture expensive furniture. Just spend the money and let customers pay. To manufacture beautiful, durable furniture at low prices is not easy. It requires a different approach. Finding simple solutions, scrimping and saving in every direction. Except on ideas.

There is a lot of talk about innovation and how rare it is in larger organisations. Yet, IKEA continues to innovate. What does Cynthia say:

IKEA’s experience illustrates a key advantage of a good purpose. A clear sense of what a company is striving to do can serve as a focal point or a core organising principle around which a whole set of innovations and distinctive features can coalesce.

4. A good purpose sets the stage for creating and capturing value

Whilst I can and do come across as an idealist, I am also a pragmatist.  After all I qualified as a chartered accountant, as such I get the critical importance of profits and cash-flow. So does Cynthia, she writes:

Whatever your purpose, it must mean something to others in ways that produce good economic outcomes for you. What made IKEA’s purpose so powerful was not just that it was distinctive or well-defined, or that it made people feel part of something bigger and more important. It also drove IKEA’s superior performance in its industry.

The acid test, then of purpose is this: Will it give you a difference that matters in your industry?  Not all differences are equal. You need a difference with real consequences….. Even a legitimate difference such as “best-in-class quality” is often rendered meaningless by companies that trumpet the words but don’t make the investments or tough trade-offs such a goal requires.

And finally

If you are doing “Customer Experience” stuff ask yourself this question “This stuff that we are doing will this give us a difference that matters with our customers and in our industry?” I say that much of what is showing up under the Customer Experience banner fails this test. And I have been wrong many times before.

If you have any interest in strategy, purpose, and organisational effectiveness then I throughly recommend getting hold of a copy of Cynthia Montgomery’s book The Strategist. It is both easy to read and it is a great read.  I swear she is versed in existential philosophy as her book is imbued with existential tones: purpose, choice, courage, being and becoming….

At Your Service and With My Love

This is personal post and a philosophical one. If you consider yourself a hard-headed business type focussed on the bottom line, nothing but the bottom line, then I suggest that you stop reading now.  If you are open minded then it is possible that this post will find a listening in you.  Let’s start.

Shopping with my mother

My mother is elderly.  She finds it hard to get up, she finds it hard to move about, she finds it exhausting to go up  stairs, she has to be careful coming down the stairs…. She needs help buying the weekly groceries.

This week, I was with my mother for a day and took her on her weekly shop to her favourite grocery store. Whilst there, I had to put patience into the game. Let her walk slowly, let her take her time.  Some of the products were to low for her so I bent down picked them up and let her touch them to see if they were good enough for her.  Her eyesight is not that good and she struggled to read the prices. So I read out the prices for her.

I also found myself protecting her. How exactly? There were many people in this small supermarket and they were in their own worlds: busy focussing on their tasks, rushing by, and oblivious to the needs of an old lady.  More than once I stood between my mother and someone’s trolley or brisk – shoving – walk.  Finally, we got to the cashiers till and stood in line.

An old man struggles with his shopping

There was an elderly man in front of us. His hand-held shopping basket was full. He found it hard to carry so he placed it on the floor while he waited for his turn. When his turn came  he bent down and started taking one item at a time from the basket and putting it on the conveyor belt. Just watching him I got his situation. I felt for him as one human being for another fellow human being.

So I walked up to him, looked him in the face, smiled and said “Allow me to help you with this!” Then I picked up his basket from the floor and placed the contents on the conveyor belt.  The old gentleman had a huge smile on his face whilst saying “Thank you!” Someone standing in the queue, came up to me and said “It’s great of you to help out this old man. This just does not happen anymore.”  I replied, “Thank you. I was brought up to help those who can do with help.  This is my mum, she’s the one that bought me up that way.”

Now here is what gets me: the cashier saw the old man’s struggle and did nothing; many others standing around queuing saw the old man’s struggle and did nothing.  Where is our humanity?  Have we disconnected from our empathy – our natural way of being?  Have we locked up our natural compassion and thrown away the key? Is all our talk about service, experience, relationship simply empty talk?

Some questions to consider about business, about our lives

I have a deeper questions for you, me, us.  What are our lives about?  What are our businesses about?  What are our organisations about?  What is our society about?  Is selfishness, greed, and money-making the best that we can aspire to?  Is “profit maximisation” the most noble purpose that we can aspire to? Is that how we want ourselves and our age to be remembered?

If business, if Customer Experience, is merely the pursuit of profit maximization then count me out.  I am not inspired by that game.  And, I doubt that many people in your organisation are inspired by that game. How many people do you know that get up in the morning fired up by the idea of filling the pocket of nameless-faceless shareholders with gold?

I yearn to live a noble life: to make a contribution; to generate connection and touch lives; to contribute to co-creating a world that shows up as a kinder world – a world that works for all.  How about you?  Are you happy with a life, a tombstone, that reads “Here lies X s/he did a great job of maximising profits for shareholders.”

If you find yourself called to life a noble life, like the one that I have described then I’d love to hear from you, to know you better, to connect with you, to work with you if that is a possibility.

At your service and with my love

Maz

(e: maz@maziqbal.com)

Digging into ‘customer-centricity’: what is the defining feature of a ‘customer-centric’ company?

My last post (a practical enquiry into service, customer experience and customer-centricity) generated some interesting conversations.  A particularly interesting conversation took place between Bob Thompson and me – you need to scroll towards the bottom and read the comments.  In this post I want to address the key question that Bob raised:

Customer-centricity is at least as vague a term as CRM and CEM. Is it a strategy? A state of mind? A loyal relationship?   Personally, I’ve defined “being customer-centric” as delivering value that customers care about. The end results should be more loyal customers.  But it’s not quite that simple. How do we explain the success of Ryanair, which offers a low-cost service, gets lots of travelers and makes money, but can hardly be said to have raving fans?

If you have looked into that conversation between Bob and myself you will see that I addressed the Ryanair issue.  So what I up for addressing is the question: what clues can you look for that helps you to distinguish a ‘customer-centric’ from a ‘not customer-centric’ company?

Is listening / responsiveness the distinguishing feature?

In this post Bob Thompson asserts that Starbuck is customer-centric because it listened to him.  Bob had an issues with his local Starbucks: “we started noticing that about 30 minutes before the store officially closed, employees brought the tables and chairs from outside and piled them up inside the store. Frankly, it made the store look like “we’re closing” and customers weren’t welcome.” So Bob wrote an email to Starbucks pointing out the issue, he got a response within 24 hours letting him know that the matter would be discussed with the store manager.  And then Starbucks acted on Bob’s email request: “Not only did Starbucks listen, they did something. Fast!  That evening, and all the evenings since then (I checked) the tables and chairs were left outside until closing. And what do you know, there were customers actually using them!

So my question is that if a company makes it easy for you to contact it, responds quickly to your contact and then sorts out your issue / gives you what you are asking for (like Starbucks did with Bob) does that make that company customer-centric?  From where I stand and view customer-centricity the answer is NO.  Why?

Think back to my last post and in particular the issue that arose between the customer and Joe the bartender. Joe acting in the best interests of the customer (including the customer’s wife and three children) refused to serve more alcohol to the customer.  The customer had an issue with this, he reached out to the company, the company gave Joe (the bartender) a telling off, fixed the issue and compensated the customer for his trouble by giving him two free drinks.  What was the end result?  The customer got heavily drunk, drove home, had a crash and died – taking three other people with him.

Purpose-Vision-Mission statements – do these help us distinguish a ‘customer-centric’ company from a ‘not customer-centric’ company?

When you read the following vision/mission statements I’d like you to be present to what emotions they evoke in you as well as what thoughts bubble up for you.   Let’s start:

Ryanair:  “Ryanair’s objective is to firmly establish itself as Europe’s leading low-fares scheduled passenger airline through continued improvements and expanded offerings of its low-fares service. Ryanair aims to offer low fares that generate increased passenger traffic while maintaining a continuous focus on cost-containment and operating efficiencies.”

Yahoo!:  “Yahoo!’s mission is to be the most essential global Internet service for consumers and businesses.”

Microsoft:  “Microsoft’s mission is to enable people and businesses throughout the world to realize their full potential.”

Dell:  “Dell’s mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve.”

OK, now lets move on to a second set of companies.  As you read these mission statements please be present to how these land for you – what feelings and thoughts do these evoke for you?

Chick-fil-A:  “Chick -fil-A’s corporate purpose statement reveals the heart of our company: “To glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come in contact with Chick-fil-A.” Chick-fil-A’s mission statement reveals our commitment to service: “To be American’s best quick-service restaurant.”

Southwest Airlines:  “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”

Amazon: “Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”

USAA: “To facilitate the financial security of its members, associates and their families through provision of a full range of highly competitive financial products and services; in so doing, USAA seeks to be the provider of choice for the military community.”

Starbucks:  “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.”

Virgin Atlantic: “At Virgin Atlantic, our mission statement is simple…To grow a profitable airline…Where people love to fly…And where people love to work.”

Did you notice the key differences?

Customer-centric companies are in a totally different league when it comes to the game that they are playing.  Did you notice that their mission statements:

1.  start with / draw attention to customers, what jobs they will do for their customers, what value they will create, how they will treat their customers?

2.  speak words that speak to human beings in terms of their ‘concerns’ as human beings: ‘glorify’,’ faithful’, ‘positive influence’, ‘service’, ‘warmth’, ‘friendliness’, ‘pride’, ‘spirit’, ‘dedication’, ‘member’s, ‘worthwhile satisfying employment’,’discover’, ‘financial security’, ‘competitive products’, ‘families’, ‘nurture’, ‘human spirit’, ‘love’, ‘people’..?

3.  are concrete, meaningful and even inspiring to customers (and employees) whereas the mission statements of the ‘not customer-centric’ companies are vague, amorphous, general and generally meaningless and uninspiring?

Customer-Centricity: being of service, enriching lives and contributing to a better world

From where I stand I am clear that the key characteristic that characterise and distinguish a ‘customer-centric’ company from a ‘not customer-centric company’ is that the ‘customer-centric’ company is playing a totally difference game.

The ‘not customer-centric’ companies (including those that espouse customer-centric rhetoric) see customers as tools, as instruments, as means for enriching the Tops and the the people who represent the shareholders. And within that context there is no consideration of the longer term, stewardship of the world that we live in, the dignity of our fellow human beings.  Anything goes as long as ‘rent’ is extracted from customers to line the pockets of the Tops and shareholders.

Under the rhetoric of ‘customer focus, customer experience, customer-centricity, customer obsession’ is the urgency to sell, sell, sell the products that the companies has to sell.  The customer rhetoric is there only because it has become hard to sell because customers are more demanding, more discriminating and their is a high level of competition. The whole edifice is built on fear, greed and the “I-It” orientation towards customers, employees, suppliers, partners, communities in which these companies operate.  In short, this is business as usual – the standard economic/industrial/organisation model that is in place today and accepted as best practice, the smart way to do business.

The ‘customer-centric’ companies are primarily coming from a context of being of service, of contributing to our fellow humans, of making a genuine and worthwhile difference to the lives of the people who touch and are touched by the company- customer-centric companies live a “I-Thou” orientation.   The Tops who founded and/or are running these companies get the importance of making profits.  Yet, that is not the purpose nor the mission of these companies.  To ‘customer-centric’ companies profits are like the air that we breathe necessary to survive and profits are the reward that customers/employees bestow on the company for the service that the company has rendered.  Profits are marker of the level of contribution they make.  And profits are the grain that can be stored today for when the ‘seven years of famine’ strike.

A warning or two

First warning: ‘customer-centricity’ does not necessarily guarantee financial success.  Customer-centric businesses can and do go out of business – all that is needed is a disruptive innovation.

Second warning:  you actually have to live up to the ‘customer-centric’ mission statement to be viewed as being ‘customer-centric’ by your employees and customers.  Starbucks espoused the mission but took all manner of actions that did not fit in with the mission to grow revenues and profits to meet shareholder expectations.  It got into a mess and the man who had formulated, fought for and lived the mission statement (Howard Schultz) had to come back, take over and turn around Starbucks – get the people in the business connected with and living the mission wholeheartedly.  Today, Tesco is where Starbucks was at.  It espouses a fine mission – “Our core purpose is, ‘To create value for customers to earn their lifetime loyalty’. We deliver this through our values, ‘No-one tries harder for customers’, and ‘Treat people how we like to be treated” – and it failed to live up to it for several years and is now paying the price.

Marc Pritchard (P+G’s global marketing chief) has an interesting and inspiring view on the future of marketing and brand building

I get present to the reality of marketing and I find myself disappointed

Last night I had the privilege of participating in a CMO dinner hosted by IBM in Central London.  Thank you IBM.  If I am truthful (and my commitment is to be straight with myself and with you) then my experience was one of entering into the conversation in a state of delight and leaving the dinner a little despondent as regards the state of marketing: same old thinking – “consumers”, not “people”, not “our fellow human beings”;  few marketers feeling that they work in an organisational context that allows them / calls them to be customer-centric;  the relentless focus on ROI driving short term thinking, hobbling tinkering / experimentation….

Please understand I am not being critical of marketers (my fellow human beings), just disappointed about the state of marketing (the activity, the function).  As a result of last night’s dinner I have more understanding and more love of my fellow human beings toiling away in marketing.  They want to be customer-centric, to improve the customer experience, to forge stronger bonds.  They find it difficult to do so as they have to please their bosses who are insistent on making the numbers no matter what it takes.  And the numbers that matter are this quarters numbers.  That kind of orientation does not allow for the long term game that the likes of Jeff Bezos (Amazon), Tony Hsieh (Zappos), Richard Branson (Virgin Group), Julian Richer (Richer Sounds), Chris Zane (Zane’s Cycles), Steve Jobs (Apple) play or played so well.

Why did I get so down?  The key questions are not being addressed

It occurs to me that the central question of our times is this one: “How do we touch lives, create value for customers, make the world a better place?”  No-one talked about this.  Yes, there was talk about brand.  And to me that occured as brand as image, brand as personality, brand as a mask that we put on.  Few talked about ‘character’ – the values we uphold, are proud to uphold, values that uplift us, our colleagues, our customers…..

Follow close behind is the second question: “What do I stand for, what do you stand for, what do we stand for, what can we be counted on?”  I write two blogs (this one and the Possibility-Transformation-Leadership blog) and they are expressions of my stand: to be useful, to provoke fresh thinking and be of service to my fellow human beings, to put something into the game of life, to make a contribution.  If I can answer this question (an ordinary person) then why can’t brands and professional marketers answer this question?

The last question that is particularly relevant for these times of discontinuity (in chaos theory this would be called a “phase transition”) is: “How do we get access to what we don’t know that we don’t know?”.  The answer is experimentation.  We experiment – we try out lots of different ideas on a small scale  (the nudge theory / approach) and see what shows up in the world.  We reflect on what shows up, we learn and then we use that learning to do more intelligent experimentation – building on what works, learning from and letting go that which did not work. The consensus around the table was that in the current economic climate there is a relentless focus on ROI and this prevents/hinders/shackles any experimentation: experimentation is a luxury that the marketer cannot afford.

P&G’s Marc Pritchard lights me up, restores my faith in marketers and marketing

Marc Pritchard is P&G’s global marketing and brand building officer and he gave a speech on the 21st March at the WACL dinner.  I found it an inspiring speech, one that provides both a vision and an actionable pathway to the future.  Here are the key point that speaks to me:

1. Find your purpose, be useful

“….as a person and as a leader, define your own purpose. What drives you? What difference do you make in people’s lives in and outside of your organisations?  I think of my simple purpose in life as “to be useful”. To be useful in every meeting, every pitch, planning session or business review; to be useful to all the people around me.”

My view:  this is absolutely the first questions each and everyone of us has to answer authentically.  I exist, you exist and while we are here lets be useful!  Figuring out how you can be useful and make that contribution which you are best placed to make.  That goes for individuals, teams, functions, brand,  organisations.  We have all the tools to be useful – really we do, that in a nutshell is what the internet and social media is all about.

2. Do and learn: “Try new things, accept some won’t work, learn why’

“So, this is my advice to you: Since we are all building brands in a digital world, I would encourage you to “do and learn“. We are trying to make this shift ourselves at P&G – and it’s not always easy. But we have to try new things, be accepting that some things won’t work and learn why. If we are going to live our vision to create 1:1 relationships in real time with every person in the world, this is the only way to do that – and we believe it’s the future of brand building.”

3. We don’t need digital marketing plans, we need holistic brand building plans founded on purpose and contribution

“At P&G, every brand must define its purpose of how it uniquely touches and improves lives with its superior benefit. Brands must still discover deep human insights that make a brand relevant in a person’s life. And from these insights, brands must create big ideas that drive preference for its superior benefits. We translate big ideas into content that engages people in conversations with our brands.

We are building brands in a rapidly changing world – and in a digital world. But I’m clear to tell our marketers that we don’t need “digital marketing” plans. We need holistic brand building plans with big ideas that can be executed in a digital world.

I’m excited about the opportunities that these shifts present to us as brand builders. And it’s also my belief in the power of purpose that makes me so optimistic about the futureAt P&G, our purpose is to touch and improve the lives of every person in the world. Every one of our brands has a unique derivative of this purpose. And it is this purpose that drives everything we do.”

4. Here’s the shift that is required

“….P&G’s vision is to build our brands through lifelong, one-to-one relationships in real-time with every person in the world. But achieving this vision requires some fundamental shifts in how we operate.

– It requires shifting our mindset to think of who we serve as “people”, not just “consumers” in order to make their whole lives better.

– It means shifting from superior products as the sole source of brand value, to creating value from a wide range of sources, including a broader range of disruptive and transformational products, non-product services, knowledge, information and even entertainment.

– It means shifting from static marketing campaigns that we launch and adjust infrequently, to real-time “always on” brand building with ways of constantly engaging people to participate in our brands, and – at their best – even inspiring movements.

– It means shifting from mass broadcasting, to creating more personal, one-to-one conversations with individuals and the communities in which they’re active.

– It means shifting from a linear path to purchase that ends up at a physical retail store, to an approach of “anywhere, anytime” shopping.”

5. The three forces that make it necessary for marketer, brands and companies to make this shift

“Technology gives people 24/7, real-time connections to everyone, and the power to transform public opinion on just about anything, including the direction of brands, companies and even countries. And mobile technology is unleashing a new wave of power as nearly every person on the planet will soon have transparent, always-on information, education, and even entertainment.

Trust in institutions is eroding so people want to know who is behind brands and companies; and if we’re interested in improving lives, versus just making money. Today’s heroes are “everyday people” whose actions inspire others to follow and whose stories generate the most interest and advocacy.

People are participating. They’re involved in conversations about our brands and companies like never before. They’re creating content through conversations, and creative expressions of how they think and feel about topics.”

Final words

I am in total agreement with Marc Pritchard, it occurs to me that we (Marc and I) are fruits of the same tree, envisioning the same vision, and on the same path.  This is a ‘manifesto’ that I totally buy into – actually I have already bought into.  It is because I have already bought into it that Marc’s speech resonates with me and leaves me uplifted / inspired.  And if marketers and marketing were to follow this ‘manifesto’ then marketing would become, for the first time in its history, a noble profession.  What do you think?

The one difference that makes all the difference

The C-level doesn’t get it

In a recent post Jeannie Walters she highlighted the 4 challenges facing customer experience practitioners.  Which challenge is first in the list?  “The C-Level Doesn’t Get It”.  She goes on to write:

  • “In fact, an overarching (and repeating) lament was “How do I get them to GET IT?””
  • “No matter how you say it, it seems to be an ongoing, uphill battle right now.”

The difference between philosophy, strategy and tactics makes all the difference

Now that may not make sense until you get that there is world of difference between philosophy and strategy and tactics.  Philosophy is the ground zero of existence – it is your raison d’etre of being.  Strategy is simply a course of action that you have selected in order to achieve what matters to you – your higher order objectives.  Tactics are simply the how of strategy; tactics do not have to connect up to constitute a strategy and often they do not in many organisations when functions develop their own silo ‘strategies’ that optimise the parts and end up suboptimising the whole.

Now here is the issue: almost all companies have approached customer-centricity/customer experience/customer focus as a strategy (at best) and/or simply tactics to grow revenues and profits. Very few companies have embraced creating superior value for customers as their business philosophy – the reason for existence.  And that makes all the difference. The acid test for differentiating between philosophy and strategy is to look for the “in order to”.  Think of the early Christians who accepted being eaten by lions rather than renounce their faith: these Christians could have renounced their religion in order to live – the pragmatic business person would say that the sound strategy was to renounce the religion.  Starbucks ended up doing that for a while and then Shultz resumed the mantle of CEO to help Starbucks to rediscover its founding philosophy: the customer experience.

What we can learn from Steve Jobs and Apple on this distinction

The points that I want to make are excellently spelled out in a post by James Allworth.  Here are the aspects of his post that really speak to me and to the central point that I am making in this post (anything in bold is my work):

Everything — the business, the people — are subservient to the mission: building great products. And rather than listening to, or asking their customers what they wanted; Apple would solve problems customers didn’t know they had with products they didn’t even realize they wanted

When describing his period of exile from Apple — when John Sculley took over — Steve Jobs described one fundamental root cause of Apple’s problems. That was to let profitability outweigh passion: “My passion has been to build an enduring company where people were motivated to make great products. The products, not the profits, were the motivation. Sculley flipped these priorities to where the goal was to make money. It’s a subtle difference, but it ends up meaning everything.”

When he returned, Jobs completely upended the company. There were thousands of layoffs. Scores of products were killed stone dead. He knew the company had to make money to stay alive, but he transitioned the focus of Apple away from profits. Profit was viewed as necessary, but not sufficient, to justify everything Apple did.

An executive who worked at both Apple and Microsoft described the differences this way: “Microsoft tries to find pockets of unrealized revenue and then figures out what to make. Apple is just the opposite: It thinks of great products, then sells them. Prototypes and demos always come before spreadsheets.”

Similarly, Apple talks a lot about its great people. But make no mistake — they are there only in service of the mission.  A former Apple product manager described Apple’s attitude like this: “You have the privilege of working for the company that’s making the coolest products in the world. Shut up and do your job, and you might get to stay.”

Apple hasn’t optimized its organization to maximize profit. Instead, it has made the creation of value for customers its priority. When you do this, the fear of cannibalization or disruption of one’s self just melts away. In fact, when your mission is based around creating customer value, around creating great products, cannibalization and disruption aren’t “bad things” to be avoided. They’re things you actually strive for — because they let you improve the outcome for your customer.

A final word

The hardest thing for ‘experts’ and ‘Tops’ to do is to unlearn – to let go of the accepted wisdom and habits that have been forged over many years.  Yet that is exactly what is required today for companies in competitive markets to prosper.  And it is certainly required if companies want to excel at the Customer game – create superior value for customers through superior value propositions that make customers lives simpler, easier, richer.  Are professional managers up to that task?  Here is what James Allworth writes in his post:

“Anyone familiar with Professor Christensen’s work will quickly recognize the same causal mechanism at the heart of the Innovator’s Dilemma: the pursuit of profit. The best professional managers — doing all the right things and following all the best advice — lead their companies all the way to the top of their markets in that pursuit… only to fall straight off the edge of a cliff after getting there.”

What do you think?

Better World Books: the power of engagement through cause and not gimmicks

Forrester says we live in ‘the Age of the Customer’

Yesterday I came across this post by Josh Bernoff (Forrester) where he states that we are living in “the Age of the Customer” and asserts “that companies must be more than customer focused, they must be customer obsessed”.  He then goes on to set out the changes that companies need to make to become customer obsessed.   In the video Josh says “The only source of competitive advantage is knowledge of and engagement with customers.”

I say that ‘Cause Obsession’ trumps ‘Customer Obsession’

I beg to differ.  There is something more compelling than customer obsession.  What is that?  A obsession with a cause that touches the human heart and inspires customers, employees, volunteers, suppliers and the community to come together and live/further that cause.  It is one thing to engage customers it is something else when you can engage all the stakeholders. It is one thing to engage through gimmicks and something else to engage through an uplifting cause.

BetterWorldBooks is an excellent example of company that is engaging a range of stakeholders through cause. BetterWorldBooks landed on my radar back in December and prompted me to write ‘Better World Books: a great example of customer centricity being practiced’.  And then again last month prompting me to write ‘Better World Books: a great example of hi-touch relationship marketing’. So I decided to dig a little deeper to figure out what makes this organisation special.

A few facts on BetterWorldBooks

The company was founded by three friends and graduates of The University of Notre Dame in 2002.  They started by selling unwanted (and used) university textbooks online.  The cause and the social mission was built into the company right from the start – the very first book collection drive and sale at Notre Dame.  You can read more about the founding of the company here.

BetterWorldBooks has operations in the  USA and the UK, employs some 380 people, has some 1200 volunteers doing book drives (to collect unwanted books) and has some 3.5m books sitting in a huge warehouse at any one time.

Today, BetterWorldBooks is a global bookstore which turns up at number 261 in the Top 500 list of internet retailers.  It sells both new and used books.

Here is what the revenue picture looks like: $20m (2008); $31m (2009); $45m (2010); and $55-56m is expected for 2011.

BetterWorldBooks has raised over $9.7m for literacy and libraries and saved almost  56m books from lying around not being used and/or ending up in the trash cans.

They have shipped over 1.4m books (valued at $10.9m) in 58 sea containers to Africa. If you want to read more you can find their blog here.

What does BetterWorldBooks success rest on?

I am clear that the success of BetterWorldBooks is its cause.  The cause enables it to build a network of strong relationships with all of the stakeholders.  The students and libraries (suppliers) that donate used books.  The volunteers who do the book drives – collect the books.  The partner organisations (Books for Africa, Invisible Children, Room to Read…) which do the work on the ground of improving literacy.  Customers, like me, who buy the used and new books.

Why would anyone donate their time to collect books or donate their books for a profit organisation?  Because they believe in the cause – what BetterWorldBooks stands for.

Why would a customer like me make a return visit to BetterWorldBooks?  Simply because a core part of their Mission and Values is to flabbergast customers with great service.

Does BetterWorldBooks have an advantage over Amazon?

How does BetterWorldBooks turn customer like me into advocates?  Through a combination of outstanding customer service and cause.  In my world BetterWorldBooks has an advantage over Amazon.  I am an advocate forAmazon yet Amazon does not stand for any cause that touches, engages and inspires me.   In a world where all the other things are  increasingly becoming equal, cause is the difference that makes a difference.

What do you think?

TeamSnap: everything that you need to know on being customer centred

In my travels across the internet I came across TeamSnap and in particular this post:  Who Is Helping Whom? How Our Customers Are Using Support To Help Us

I have mentioned this post as it captures the true essence of customer centricity.  As I have written before, customer centricity is fundamentally about the Being mode: reason for existence and the stand you take in life.  Yet far too many people talk about customer centricity solely in terms of the Doing mode – usually in terms of capabilities, technologies, processes.

One way of thinking about this is to distinguish between character and personality.  Character is who you really are, what you really care about, what you stand for in life, how you behave when your up against the ropes.  Personality is the show, the mask, that you put on for others and sometimes for yourself too.

Now back to TeamSnap and their post.  Here are the characteristics of TeamSnap that led me to write “Congratulations. You totally get what it means to be customer centric. I shall be using you as an example of customer centricity in my blog”:

  1. TeamSnap’s reason for being is to make life easier for those who organize and participate in team and group activities.
    Note that the reason for existence is not to be the biggest, the best, to dominate the world, to provide a great return for shareholders, to deliver a growth rate of 20% and all that stuff.
  2. We do everything we can to make the application über-intuitive, so obvious that any user can pick it up and use it.
    Many companies do not focus on making their products easy to use.  The people who build the products often have knowledge, skills and ability that the user will not have.  And they are blind to this fact: I remember listening to a famous e-commerce software company demonstrating their suite and wondering why they expected the users – marketers – to be comfortable writing if then queries!
  3. With that kind of product philosophy, you might expect Customer Support to be a second-class function. A place outside the “cool” functions like new feature development, or marketing. You would be wrong. Support is a cornerstone of the company.
    Too many companies that claim to be customer centric (or headed in that direction) put most of  their money and time into the cool functions of marketing, sales and product development.  And the Customer Services (Support) function is often seen as a drain on company money and company profitability.  As a result it has about the same status and welcome as someone who has Aids or in past times, someone who was a leper.
  4. Why? Because TeamSnap isn’t perfect. It doesn’t work the way that everyone assumes it will. It doesn’t have all the capabilities that everyone expects. It even has, horrors!, bugs.
    How refreshing!  My experience is that in the many companies management is convinced that the company makes perfect products and deliver perfect service.  And the customers who are not happy are either trouble makers, stupid or lazy in that they have not taken the time to learn what they need to learn.
  5. We decided if we were going to make the investment, we were going to go whole hog. We were going to put top notch people in the support role; we were going to back them up with our best software developers; we were going to have everyone in the company, even yours truly, in the Support trenches on a regular and ongoing basis.
    Now compare this with the standard situation where the Customer Services function is seen as a necessary evil – a drain on customer profitability – and the focus is on cutting costs.   How many companies can claim that they put top notch people in Customer Services?   And how many CEOs spend time – regularly and often – in taking calls from customers, serving customers?  You are a customer, what is your experience?  Do you look forward to interacting with Customer Service?  No, why not?

A last word:  it will be interesting how well TeamSnap fares as it grows.  History suggests that as companies grow and especially when they tap the capital markets their reason for existence becomes making the quarterly figures that the analysts expect.

Please note that when I say this I am NOT making a moral judgement, I am simply stating that there is a structure to the capital markets and that structure gives rise to specific behaviour: you have to make the quarterly figures if you want to keep your job, keep your company.