As I travel the world presenting and working with clients, I am often asked, “What is the biggest challenge for organizations who want to become customer-centric?” My answer is always the same: “Leaving the comfort of the traditional organization model with its functional silos, product obsession, command and control culture, volumetric performance measures and internal perspective.”
In our customer-centricity model at Round, we represent the stages of organization transition as bases in a baseball diamond, as it really helps to convey the sense of journey and has clear milestones along the way. First Base is the traditional organization described above. It’s a great place for controlling things but not a good place for customer or employees, and the functional organization, fractured processes and controlling culture leave no room for flexibility. Second Base is a customer-focused organization that optimizes its products and services for each customer segment, designs process around customer events across the functional solos and learns from customers (and those who serve them) to continuously improve the customer experience—eradicating errors and inconsistencies, the major causes of customer dissatisfaction and attrition. Customer and employee satisfaction loyalty both start here.
‘So much change began to happen that the business quickly became chaotic and unstable.
Ken Blanchard, in his recent book, Leading at a Higher Level (FT Press, 2006), describes organization culture in terms of birds. “There are ducks, and there are eagles,” says Blanchard. “The ducks run around the ground quacking all the time, stating rules, following orders, doing what they are told and often pecking at other ducks. Eagles soar high above to get the best perspective and decide what is best for the customer.” Ducks operate in First Base organizations; Eagles flourish in Second Base organizations—and beyond.
So why do organizations remain at First Base if both customers and employees are unhappy? In my opinion, it’s partly because shareholders and analysts misguidedly believe that this is the best way to maximize profits and partly because the management team doesn’t know how to make it happen. How many times have you heard executive managers say, “We want you all to pull together and row this boat to the Promised Land where there are white beaches, green palm trees and blue skies,” only to keep the boat firmly anchored to the dock because of the way the business is managed and measured? And then they berate employees for not moving! No wonder employees get frustrated and cynical.
But it isn’t just employees. Customers also get frustrated when they hear the marketing rhetoric but see no difference. An international cellular company launched two new TV advertising campaigns in Q4 2006 and saw its customer satisfaction fall by 10 percent. Why? Because the campaigns set new customer expectations, but the company did nothing to change the product or service experience.
The journey to Second Base—a customer-focused organization—has to be managed carefully. Change of this magnitude without a method of prioritizing and guiding that change tends to create chaos. It was our clients who told us that there is an invisible line halfway between First Base and Second Base. They called it the “Line of Chaos.” Here is one client’s story.
A global brand, highly respected by business leaders tried to move away from product-centricity because falling customer satisfaction was beginning to hurt the company’s repeat business. The clarion call for change was heard across the global organization. Employees were charged with helping the organization become customer-focused. A “customer-first” culture program was launched and posters placed in all the contact centers.
Employees were “empowered” to do what is best for customers and to champion improvements to products, policies and processes. Contact center call durations rocketed as customer-facing employees took more time to resolve customer issues at the first point of contact, often without the necessary information. Process changes were being made on a daily basis. Product improvements were also coming in thick and fast. So much change began to happen that the business quickly became chaotic and unstable.
But it wasn’t just the rate of change that caused the instability; it was also the lack of coordination. One person might change a policy that has a serious impact on another part of the organization—like the decision to ship product components direct from each factory instead of warehousing and shipping complete solutions. Whom did the customers call when only one item arrived? Customer service, of course—who, then, transferred all the calls to sales, as customer service had no access to order status. That’s not to mention the poor person in charge of shipping whose costs trebled overnight or the person in charge of returns whose volumes went up a staggering 3,000 percent in the first month.
The resultant chaos, instability and increased costs—precisely the reverse of the intended outcome—led the finance organization to call for a return to the way things were before, “when we had control.” And so, back to First Base the organization went, undoing all the good that had been done. One member of the organization told me, “We’ve been to the Line of Chaos and back more than once!”
It is simply not possible to invoke change of this magnitude without a framework for prioritizing and guiding that change. A new governance process is certainly required to prioritize and manage all change supported by new methods of business planning. The planning process should be one that forces horizontal alignment and consistency across functions, rather than letting functions plan and manage their own change, driven by misaligned performance metrics.
Customer feedback, often left inside marketing, should be a key driver of the change process. Customer-facing employees, partners and suppliers should also be involved in providing feedback on what is not working and this feedback used to pinpoint what needs improving. Perhaps the key requirement is a clear statement on what becoming a “customer-focused organization” really means for the company. This is the blueprint that guides the change, against which all change can be assessed and scoped.
But most importantly, the executive management team must lead by example and not retain First Base metrics while expecting the organization to behave as a Second Base company. It is simply not possible. Perhaps the most important comment from Blanchard’s book is this: “Profit is no longer the goal. Profit is the applause you get for taking care of your customers, creating a motivating environment for your people and being a good citizen in your community.”
David Rance, CEO of [link to] Round, is a former customer care director for a national telco. Round provides tools and services that organizations use to align their capabilities at their chosen level of customer centricity. Call +44 20 7623 2300.