Who’d be an executive today? It’s enough to have to cope with life post Enron. Not long ago, "Sox" meant my favorite baseball team—or footwear. Now, as SOX (for Sarbanes-Oxley), it’s the constant threat of a jail sentence if you step outside the corporate governance lines.
But environmental protection is also increasing, as the world wakes up to the fact that we have to do something now and not leave it to our grandchildren. Then there’s employee legislation and protecting the rights of individuals and minority groups. And what about trade restrictions, protectionism and anti-globalization threats?
So when customers threaten that your company better respond to their needs or they’ll move to another supplier, you just can’t help wondering if it’s all worthwhile.
What makes this all the more challenging is that your employees think you have all the answers. Right? Not really. No one has the answers, because this is new territory for all of us. We’re not quite making it up as we go along, but you could be forgiven for thinking that at times, and it must sometimes look like that to employees and shareholders. Employees often complain about the "strategy du jour," as the organization tries different things to maintain its competitive advantage in a global market, often changing its mind or reversing former decisions. And doesn’t it seem like the executives are the only ones who are thinking and everyone else is waiting to be told what to do?
Command and control
Well, if you’re nodding your head at all this, the chances are good that you are running your company with a command-and-control culture. And that’s not a good place to be for your customers, your employees, your shareholders or for you. Yet, based on feedback from more than 15,000 companies across the globe, Round has found that more than 70 percent of executives do just that. At a meeting with four executives of a large bank (of which I am a long-standing customer), I asked why they thought their frontline people would change their behavior toward customers when they had not changed their metrics or reward and recognition package. "Because I have told them to," one said. And he was deadly serious.
At Round, we have done a lot of work defining the transition of a product-centric organization to one that is truly customer-centric. We have identified more than 75 groups of capabilities that need to transition if the organization is to be aligned at a new place. These capabilities range from the company vision and brand values, goals, customer processes and customer insight to organizational structure, culture, customer IT and performance metrics. But the most important set of capabilities involve the management style. Product-centric companies tend to manage their business top down. The very word, "management," means to control the outcome of an activity.
This is the world of Six Sigma, factory thinking, utilization, productivity and efficiency. This is not the world of customer empathy, customer feedback, learning and improvement and customer flexibility. Dick Lee and I recently wrote an article explaining why Six Sigma was unsuitable for use in customer-centric organizations. It is not the fault of Six Sigma; it is the "Six Sigmys" who apply it religiously to manage (control) processes to create predictable outcomes. The problem is that it is not just processes in which this applies. People are managed; costs are managed; even quality is managed. And command-and-control cultures exhibit one characteristic above all others: blame!
At the same bank I mentioned above, I sat in the call center, listening to outbound customer calls. I asked the bubbly energetic agent why she used the awkward script on her screen that destroyed the customer rapport she was so brilliant at creating, rather than her own words. She placed her hand over the microphone on her headset and mouthed, "All the calls are recorded and if I don’t say this exactly, I’ll get fired." And she was considered a star performer! I later found out that 25 percent of the "staff" in the call center was checking on the other 75 percent. Who is going to take risks or challenge in that environment?
Tom Peters says, "We trust complete strangers not to drive on our side of the road, to obey traffic signals, perform life-saving operations on our bodies, provide gas and electricity in a way that doesn’t blow us up; yet we don’t trust our own employees to manage our customers." This is because we operate a political system of self-management within defined guardrails, whether it’s legal requirements, safety or just plan common sense. (If you run a red light, there is a good chance someone is coming the other way. And that person’s vehicle may be bigger than yours—but it’s still your decision.)
If you think we have too much legislation; that governments are controlling us because they don’t trust us; that they are legislating for common sense and it is all infringing on our rights to be individuals—you now have some idea how your frontline people feel when dealing with your customers.
Customer-centric companies need to be optimized for customers and those who serve them, not for managers and executives. Frontline people need to be empowered to do what’s best for the customer and drive out all the errors and inconsistencies that get in the way of long-lasting customer loyalty and value. But they can do that only if the Four Ps (processes, policies, pricing and products) are optimized to support dynamic decision-making with defined guardrails to protect the company and with a clear governance structure for driving rapid change.
They also need to feel safe taking risks and have the decision-making authority to match their authority levels. Get it right, and the result is lower operating costs, higher revenue, happy employees, happy customers and, ultimately, happy shareholders. But what’s even better is that executives get to focus on communicating the company direction, defining the guardrails and authority levels, inspiring and coaching people to drive change, setting outcome goals and reviewing only the exceptions.
It’s called leadership, and for most of us, it’s a whole lot more fun that managing and controlling. But you can sustain it only in a company where the thinking is fully aligned across the organization. Perhaps the first thing to do is assess your executives and managers to determine which ones are really comfortable and capable of becoming leaders and get the rest hired by your competitors!