Culture Eats Strategy For Breakfast
—Peter Drucker
Over the years I’ve heard many times that “[insert breaking trend] is a strategy” to compete, grow, differentiate, etc. And I have to fess up that I’ve said the same thing myself, dating back to my early days in the CRM industry some 15 years ago.
Let me get this straight. CRM is a strategy. CEM is a strategy. Social media is a strategy. Analytics is a strategy.
Oh, and let’s not leave out my personal favorite: Customer-centricity is a strategy, too.
What’s left? Everything is a strategy! I could include most of topics discussed on CustomerThink, including digital marketing, sales methodologies, and more.
“Strategy” used in this way is meaningless puffery to make something seem more important. Nothing in this post will change that fact. But strategy should mean something if you use it in the context of a specific business — your business.
What strategy should be is a long term and high-level plan for accomplishing an important business goal. A strategy should include things like resource allocations, big choices of what to do and what not to do. Tactics, on the other hand, are all about execution — getting the plan done.
Looking at popular trends this way, are they really strategies for a specific company to win? How can it possibly be true that your company will get a competitive advantage with CRM/CEM/Social/Analytics when these same, um, strategies, are available and used by anyone.
In my view, none of these qualify as strategies, and neither does the fuzzy notion of customer-centricity. They are ideas, methods and tools that you can use to support a real business strategy for your organization. CRM, social media and analytics are centered around technologies, and CEM (for now) around a methodology. They are all important, but can’t generically do anything for your company.
CX as strategy: Same but different?
So, that begs the question, what does matter?
First, let me be clear that I do believe it’s critical to have a real business strategy for differentiation. Be it on product excellence, customer experience, cost, convenience or whatever — every business should have a plan to focus its resources to maximize its success.
Since customer experience (CX) is the hot thing right now, let’s discuss that for a moment. In recent research by Forrester and others, roughly 90% of executives say they want to differentiate on CX.
I find this interesting… 90% of companies are going to be different by using the same strategy as everyone else!
Of course, that’s not how I’d say it if I was one of those companies. I would say that I intend to do a better job of providing a differentiated CX, by providing more responsive customer service, supporting new digital channels, hiring and training clerks in my stores … or whatever it was that made my customers happier to do business with me, and not my competitors.
All of this, of course, is still not a unique strategy, because my competitors probably are doing the same thing. Who isn’t trying to solve these problems?
Still don’t believe me? Then consider a new Forrester report, which says the analyst firm predicted in 2012 that “C-level execs [would] officially name customer experience a top strategic priority.”
Forrester cites an IBM 2012 CEO study to corroborate that it’s coming to pass:
- CEOs named “customer obsession” as the top leadership trait required to steer their organizations effectively.
- 66% listed “customer relationships” as a key source of sustained economic value.
- 73% said that they’re investing heavily in “customer insights.”
Wow, it’s great that all things customer are coming to the top of CEO agendas. But it also means that many if not most firms in an industry will try to do essentially the same thing: obsess about customers, build loyal relationships and leverage customer insight. Strategic advantage: none.
The hard truth is the vast majority of companies that win don’t have a unique strategy, quite the opposite. They are doing what everyone else is doing, but have figured out how to execute better. Yes, there are exceptions, but please let’s not all try to be Apple. And Zappos, the oft-quoted example of CX excellence, is not at all unique in its strategy, just the fanatically way they execute against a CX strategy of “Delivering Happiness.”
Execution = Culture
That’s why I’ve come to the conclusion that “strategy” is an abused term and overrated as the key to business success in general, and customer-centric success in particular. Execution is what separates the winners and losers.
In the customer-centric world I’ve been researching for the past 15 years, I’ve found that better execution is driven by 5 interrelated organization habits: Listen, Think, Empower, Create and Delight.
As you can see in the chart below, there is a logical flow to these habits, but it’s not a linear step-by-step progression. Rather, it’s a systematic approach to make customer-centricity a part of how business is done, day in and day out. Sorry, there’s not just “one thing” that will lead to success.
There’s a word for this: culture.
In a business context, I see culture as not just some ethereal notion of values and beliefs (yes, they do matter) but rather a set of behaviors. As some have put it more colorfully: “Culture is how we do things around here.”
Peter Drucker also wrote (in The Age of Discontinuity): “Lack of creativity is…not the problem of organization. Rather it is organizational inertia which always pushes for continuing what we are already doing.”
Anyone who has worked in large organizations knows this to be a fact of life. Change is incredibly difficult because the organization is used to doing things a certain way.
The key to customer-centric success, my research has found, is making that inertia work for you by creating a new culture of customer-centric habits. Measurement and reward systems — depicted by the gears in the center of my diagram — are critical to re-enforce the behavior you seek.
Trust me when I say this, slogans on the wall won’t do it, and neither will “strategy” proclamations.
I’ll be writing more about these five habits in future posts. For now, I suggest taking a hard look at whether you have a unique strategy for differentiation. If you do, great. But odds are, you don’t. In either case, a culture of execution will be the key to success.
Enjoy your breakfast!
I’m training on this exact topic and you’ve executed this perfectly. Whatever your organizational strategy may be, it ultimately does come down to execution.
I’ve often said that no organization sets out to underperform, to irritate customers, or to deliver a defective product or service. So why does this happen? Why do we have unsatisfied customers? Why do we struggle with customer loyalty?
It’s because we fail in the execution of our strategy.
Hello Bob
Your assertion shows up for me as something like ‘stop focussing on your hands, focus on your feet’. Or ‘stop eating, focus on drinking that is what really matters’. Put differently, it is great as soundbite and probably not that useful in the practical world.
Having said that I am totally with you when you point out the naked truth of ‘strategy’. First, there is so little real strategy in the true sense of the word strategy ‘the art of the general that determine success or failure in the campaign of war’. And second, ‘strategy’ is used in instead of ‘plan’ because plan does not have the shine/status of strategy. There is a further point and it is that ‘strategy is an Emperor with no clothes’. What do I mean? I mean that there is no sound, take for granted, theory of strategy! Whenever you have many different schools (philosophy, psychology, social sciences, strategy) you have points of view, theories and even mere opinions. It is also a great breeding ground for bullshit.
It occurs to me that there is a deeper question around customer-centricity. Is it a puzzle to be solved? Is it a ‘building to be built’ to a know architecture? Is it a world-view, a context, from which all else flows? I will deal with this issue in a forthcoming post. Why? You are an intelligent man and I am sure you can work that out immediately.
All the best and I wish you the very best
Maz
Thanks for your comments, Maz.
What is customer-centricity, indeed? I look forward to reading what you have to say, but I feel quite certain that it won’t change the fact that it’s a vague idea that means something a little different to every company.
For some, it means segmenting customers and targeting efforts to those who are “most profitable” — the CRM or direct marketing idea. For others, it’s about listening and fixing problems — the Voice of Customer idea. Some worship at the altar of Customer Experience and try to create an emotional bond. And the rare few are innovative and solve problems the customer didn’t know they had.
The common thread for all — trying to get “closer” to customers while making money doing so. But that doesn’t make it a strategy. It’s really more of a philosophy that is implemented in different ways, as a company matures in its approach to customers.
My point about “habits” is that in the end the people of companies have to actually do something. What guides their behavior? In most cases we are creatures of habit, doing what comes naturally and routinely to us every day, without much thought. Habits are the instantiation of what leaders believe, if they set up the right systems.
I’m not saying strategy isn’t important, just that what most companies call a strategy isn’t unique. If several companies in an industry all say they want to be most customer-oriented, which one will win? In my research I find what’s different is how they go about it — the habits they encourage within their organization, to make the philosophy and strategy come to life.
Is it more useful to focus on execution? I think so. Because I haven’t seen many cases where of a brilliant strategy winning. Have you? It’s the company that *acts* on their rhetoric that wins the customer game, not those with plans on the shelf or slogans on the wall.
Well done, Bob! The strategy/execution gap is present in so many companies where executives design a strategy, proclaim it shall be so, then never do the hard work of making sure it actually happens.
I think that the issue we often run into, and Bob’s point is that it’s human nature to try to find that one thing that will fix everything.
There’s no single solution to business success. Customer experience is a growing trend in the industry, but it’s not a complete strategy, only a component.
You have organizations that are successful in their industries but who are not known for customer experience and have no main customer experience objective, other than some basic aspects of professionalism. You have other organizations that are known for awful customer experiences, but are entrenched in an industry where customers have few alternate choices.
So in the end you CAN survive without customer experience as a core component of your organizational strategy, if you do other things REALLY well and if the market or industry conditions are right. It’s a gamble though, since you’re open to a competitor with operational efficiencies in place to perform just as well as you, plus add positive customer experience as part of their business strategy.
Hi Bob,
Thanks for a challenging article.
I believe that you are correct in asserting that the execution is what counts rather than the strategy itself. However, at least lets recognise the need for a strategy. There are lots of organisations who still may state that it is their objective to become customer centric but developing a strategy and then successfully executing it are very different.
It reminds me that many people start the New Year with the objective of losing weight. The strategies of eating healthy, doing meaningful exercise are often stated by those intending to lose weight but how many of those stating their desires on Dec 31st have lost weight come the following Xmas?
Therefore execution is a differentiator in that not everyone walks the walk. However, the strategy has to be in place first and from my five years Down Under, I see reluctance to commit to strategies that expand upon the stated objective. In other words, many organisations are still talking the talk.
All the Best,
Nick
Bob,
Great points. Strategy is indeed an “abused” term. I am an advocate of using a strategy map. In it are causally linked strategic objectives. As each of them are accomplished they contribute to achieving the mission defined by the executive team. That is their job … to answer the question, “Where do we want to go?”
The stategic objectives answer the follow-up question, “How are we going to get there?”
Gary
Thanks, Gary. I’m also an advocate of (real) business strategy and using a balanced scorecard approach to achieve business goals.
But strategies, objectives and goals are still just plans. They don’t in and of themselves *do* anything. The organization a/k/a people have to execute the strategy.
So when I say “execution” I mean the actual doing of the work, not writing down more details plans or objectives. Although I don’t say that to diminish the importance of planning.
One other point I want to amplify, and I would appreciate your feedback if you agree or disagree…
I’ve yet to hear a business leader use popular buzzwords or hot trends to communicate their strategy. They don’t say, for example,
* “CRM is our business strategy to win in the market.”
* “We’re going to beat our competitors by being an analytics-driven enterprise.”
* “CEM is our strategy for differentiation.”
These expressions are meaningless, and yet industry proponents of each trend proclaim them to be “strategies.” Not in my book. At best they can be used as elements of a company’s business strategy, which may include more focus on analytics, customer experience, etc.
Bob … I am in agreement with you that strategy is often hollow words (not much different than a company’s “mission statements” on the wall in an organization’s building lobby).
I will hold my position that the 10 to 25 causally linked “strategic objectives” defined in a strategy map are essential. Collectively, they become the strategy. What I did not mention in my brief comment above is the next step after the objectives are defined. That step is to ask, “What are the few and manageable projects and initiatives we need to pursue to accomplish them, or in some cases what core process must we improve to do it?”
The answers to those questions become the starting point for the “strategy execution” you advocate. What next follows is answering “What KPIs would should we measure to monitor the progress toward accomplishing those strategic objectives?” With those, ambitious but achievable KPI targets are needed. The capstone is to assign accountability … with consequences … to individuals or employee teams against those targets.
This mechanism, with a huge dose of leadership … should result in the strategy execution you long for.
Thanks, Gary. Completely agree. Now we’re getting somewhere!
It is the definition of the right KPIs (associated with initiatives that move to business towards its goals) and their reinforcement with appropriate rewards that creates real change.
One of the biggest problems I’ve seen over the years is an organization’s leader says we want to do X but the reward system tells the organization to do Y.
Bob, a genuinely great article.
There will always be those who sit on either side of the strategy or execution fence but your alignment of culture and execution deserves applause. Well done.
Also, re your response to KPI’s and reward systems this is spot on and something I actually wrote about previously – http://www.executionandstrategy.com/2011/07/responsibility-and-accountability-how.html
Thanks, Craig.
Loved this quote on your website by Sir Winston Churchill: “However beautiful the strategy, one should occasionally look at the results.”
Enjoyed your article on accountability. This points to another issue I’ve been writing about — employee engagement. It’s important but not the complete answer. Organizations perform best when everyone is empowered to do the right job, and accountable for the results.
Nick, thanks for your comment. Your point is well taken that having a goal is not the same as having a plan to achieve the goal.
To use your losing weight analogy,
Yes it’s important to have a goal – lose weight
Yes it’s important to have a plan (strategy) – writing something down on the diet and exercise changes that will accomplish the goal.
But let’s be honest, despite all the fad diets that have come and gone, has the strategy really changed? No. Eat less junk food, more high-quality food, and burn more calories with exercise.
The people who lose weight actually change their habits.
As you say, it’s like most New Year’s resolution. Good intentions not followed up by action.