Guess what? Customer centricity is about people…

In a previous post (https://www.dhirubhai.net/pulse/were-going-become-more-customer-centric-arent-we-maurizio-romeo/?trackingId=JMc6mZUU5LktqTqxQq7wmA%3D%3D) I proposed a 5 steps framework to achieve customer centricity. Step 3 is about people. Customer centricity happens through people. Don’t ever forget the Human Factor.

Strategy in Action

Let me explain this further starting with a very well-known case discussed over and over in all business schools: the Honda Case.

The case’s focus, as you may remember, is about the difference between “deliberate strategy” and “emerging strategy”; the story goes like this: Honda is conquering the market across different geographies; the UK government, worried for the survival of the British bike industry, engages a prestigious strategy consulting firm to understand why this is happening and what can be done. The answer provided by the consultants is: they have a noticeably clear strategy to leverage on experience curves and scale economies building on initial footholds in the lower segment of the market. However, a Stanford professor (Pascale) doesn’t buy this explanation and, some years later, goes to interview Honda’s management to understand better. He then discovers that there was no strategy to “attack from the bottom”; on the contrary, Honda went to USA to compete directly with Harley Davidson but things went quite differently from what they had planned. They were running out of cash and shutting down the US operation (just 3 people were left, sleeping in the same room to cut costs) when some people at Sears, an important retail chain at the time, saw the same three people in Los Angeles on mopeds. They then phoned up the number they found in the phone directory, spoke with a receptionist and placed their first order for 20 thousand 80cc bikes.

What always struck me was not the deliberate vs emerging approach debate but rather: can you think what would have happened if they had phoned most of the companies we know? The receptionist would have said: “sorry, we don’t sell those”; at Honda instead, the information found its way to the 3 guys in the US and from there to Japan headquarters; here, again, the information was not dismissed; on the contrary it was taken very seriously, an estimate was made, a shipment promise was verified, a price discussed and, eventually, presumably with a series of feedback cycles, a contract was signed. All in a relatively short time so that the spring sweet spot to sell the bikes at Sears would not be lost. Information, fast decision flow, commitment, entrepreneurial attitude, all made it possible to respond to new (for the company) customer needs.

Leadership Role

Company’s leadership, of course, plays a key role in people empowerment.

Let’s take Amazon. Jeff Bezos clearly pointed the way with one single sentence: always make decisions based on customer needs. And he used symbols and rituals to re-enforce the message; the empty chair at the meetings, for instance, representing the customer’s seat, just to remind every attendee of the key question: what would the customer say about this decision?

He also stated clearly and publicly again and again that he wanted to build the most customer centric company in the world. A clear commitment from the leader.

He walks the talk, too. Just to make an example, they introduced a feature which is called “Instant Order Update”. Basically, it tells you if and when you already bought an item. As Mr. Bezos pointed out during a speech at MIT (https://www.youtube.com/watch?v=J2xGBlT0cqY), this feature slightly reduces sales. However it generates a lot of positive feedback and more loyal customers; it is a well-managed trade-off between short term sales and longer term customer value; more important, it is a clear message that the choice is about “how can we provide more value for our customers?” rather than “how can we make our customers spend more?”.

Leadership and direction translate then into specific organizational mechanisms and operational procedures, such as weekly WOCAS (what our customers are saying) sessions and weekly plans of experiments carefully thought out and described in a 6 page word document (powerpoint slides being too “fluffy” and less precise) with a clear structure and topics to cover (problem – solution – difference – benefits).

Priorities and Strategic Guidelines

Another case in point is Intuit. Their priorities are clear and shape all other decisions. One of the key principles is that “customers define quality” and that simplicity of use (of their software) is the real differentiator.

Scott Cook, the founder, fully understands how critical leadership is and that you need to be clear and consistent with your fundamental choices. In a famous interview he recognizes that when you are a struggling start-up or even a growing company you face a lot of dilemmas, you may be tempted to take shortcuts to increase sales or improve financial ratios; however, using his own words: ”As a leader you are a role model and example; people learn from your actions more than you ever believe”.

Likewise Amazon (and other customer centric companies) this vision articulates in clear organizational guidelines and operational practices across different areas: they recruit software developers who privilege ease of use over fancy but complex features, cross functional teams (typically including product development, marketing, customer service and sales at least) is the standard way to approach issues and decision, the customer is always at the centre of everything: not only they use customer research intensively, but the famous “Follow me Home Program”, started a long time ago, is a substantial element of the company’s DNA. The program is quite simple:  observe the customers while using the product at home or at the office to understand if the key promise (ease of use) is being fulfilled.

In addition to that, all employees must spend some time with the customer service department and information about customer issues are diffused and shared. Leveraging the power of symbols and stories, the positive feedback and success is shared and some of the most inspiring e-mails, letters, posts, etc.. from customers are shared across the organization.

Operational Model and Systems

So far, we talked of leadership, priorities, organizational guidelines and mechanisms. Going more in depth, we must say that instructions, operational protocols and systems help too. First, they empower people because they reduce discretional options (thus also contributing to standardize expected service levels) and facilitate making choices. Secondly, they are efficient: they embed a tested solution which is made ready for the employees. A third positive element of well-crafted systems and instructions is that they reduce the amount of time devoted to transactional, poor value added work (“just do it”, “right from the start” kind of approach).

Take Ritz Carlton, for instance. They have a card with 5 key principles which every employee carries, but they also have specific operational instructions for each role. People at the reception have a manual which goes through the different interactions they may have with a customer; the manual begins with “Start with a warm friendly greeting” and closes with “End with a Fond Farewell”. The manual explains in more detail every step and clarifies what to do. For instance, “End with a Fond Farewell” reminds the employee of the implicit invitation to return which needs to be conveyed; people are trained and coached to turn the manual into reality.

People Centricity

On the other hand, we must also say that you cannot rely completely on instructions, procedures, and systems. People empowerment is much more than that.

You need people who are capable of thinking and doing more than what is written in procedures and instructions, capable of going an extra-mile.

Let me explain this with a story. Some time ago a Harvard professor who was travelling Italy with his family mixing business and leisure purposes went, together with other friends, to the well-known “Osteria Francescana” restaurant in Modena. They liked it very much and a couple of days later decided to go back. When they were going to order the ma?tre saw that the young people did not look happy and asked what the problem was and if they liked something different. The answer was: “pizza”. At that point he called up the best pizzeria in Modena and asked for two pizzas to be delivered.

To understand this fully, you have to picture the environment, the menu (with dishes named “heel swimming up the Po river” or “snails under the earth” to name a few), the brand (top restaurant in the world in 2018, 3 Michelin stars, etc.), the price range (you can google it and see for yourself); nevertheless the ma?tre, Mr Palmieri, had no hesitation and called for two pizzas. It was his autonomous, on the spot decision.

I believe this makes all the difference in the world: having the entrepreneurial freedom to make a decision for the customer versus the too common fear of doing something unorthodox; in the end, if you think well, on a different scale and scope, what Palmieri did is exactly what any wise restaurant owner would do.

As Bill Gates once said: “for one thing there’s an essential business endeavour. It doesn’t matter if you have a perfect product, production plan and marketing pitch; you still need the right people to lead and implement it”.

Empowerment and Attitude Shift

The following picture sums up the main concepts discussed:

 Knowledge Sharing and Disciplined Approach + Autonomy and Entrepreneurialism for People Empowerment  (*)

You should aim for the proactivity space, combining methods and discipline with inventiveness and adaptiveness. You should also push for widespread collaboration and knowledge sharing, ensuring at the same time autonomy and entrepreneurialism.

Empowerment is the result of knowing what to do, discovering new information (like Mr. Palmieri asking what was wrong), paying attention on details, following through. And it is the result of how you approach your fundamental business issue and how you transfer this to your employees and partners: caring about customers, striving to deliver above the expectations overall customer experience and dealing with feelings.

Empowered people have a different attitude and attitude is the little thing which makes a big difference. You need to bring in some of the best start-ups’ mentality, the “I care and I do” logic.

In the end, as they say at Ritz Carlton “we are ladies and gentlemen serving other ladies and gentlemen”. Even in the most technologically advanced world the human factor will always play a role.

I always remember a great lesson I learned during one of the consulting engagements I have been involved in; we were working for a pharma company to understand what set apart high performing sales people (even though they are not exactly sale people: they inform and influence, which is even more difficult) from the rest; one of the top performers, during the interview, said something highly enlightening speaking of how he dealt with doctors: “They may forget what you said or even what you did…but they will never forget how you made them feel”. Exactly: the key insight was that, while conveying complex content and “state of art” research findings, you had to try not to make them feel “stupid”.  Therefore, we re-defined the sales approach accordingly (advance planning script, messages tree options, simulation sessions, etc.) and, through appropriate coaching and training, improved the average performance.

Instructions and procedures were important, but it was the shift in attitude which did the trick.

Building a Customer Centric Biome

Personally, I hate the word “culture”. It’s vague and unspecific and very often it is just an alibi to justify delays or failures. I prefer the more precise words beliefs, expectations and, above all, behaviours.

You don’t forge beliefs, set expectations and change behaviours if you do not act on different levers at the same time; you may say you are going the right way if:

1.      People believe that “customer first” is their real mission

2.      Leadership team defines consistent priorities and empowers people to act and innovate

3.      Organizational and operational guidelines are clear and unambiguous, solving potential “dilemmas” in favour of the “customer first” principle

4.      Operational procedures and systems enable customer centricity (rather than acting as constraints)

5.      People are willing to learn and strive for improving customer delight

In my experience, few companies score high on all these elements and even the best ones may do so just for a given period of time.

Keep working on all of those; you need to develop a new biome, an environment where customer is king. You need to embed this into everything your company does, make sure that the customer, as it happens at Amazon and Intuit for instance, is everybody’s job. This is precisely the “Human Factor”. As in the Honda story, your people can make your fortune, but, remember - like in Greene’s novel - “every man is a traitor”… If they are not supported, coached, helped, they will revert to inertia and opportunism.

This is the third in a series of posts about customer centricity. Feel free to take part in the discussion with your comments and ideas.

I am a free-lance consultant in the areas of strategic innovation and business transformation, a venture manager with Kobo Funds and a professional associate with Nextea, the consulting company of Altea Group

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(*) Adapted from “The Insight Driven Organization” by Alessandro Di Fiore, London Business School Review