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The “Customer-First” Org Model – Part I

November 21, 2011

This week’s “Customer-First Conversations” starts a three-part discussion that focuses on building the org model that positions your business to be truly customer-centric.


Your Customers – They’re Just Not That Into You…

A survey of nearly 362 CEO’s (“Closing the Delivery Gap“, Bain & Co.) showed that 80% of them believed their customers were getting a “superior experience”.  Their customers, on the other hand, only agreed with them 8% of the time. The same study noted that only 30% of those surveyed even attempt to organize their company around delivering a superior customer experience.

What exactly, is the value of a “Customer-First” org model? Why is it important to be deliberate in this way? Why not “Shareholder-First”? or “Manager-First?” Or why not just change your marketing or return policy? A statement from last week’s discussion that stood out and is a great lead-in for this topic was “Your manager is not your customer“. It’s really about getting everyone focused in the right direction – on their real customer.

The Benefits of the “Customer-First” Organization

There are many benefits to building an organization and a culture that behaves this way (rather than consciously and unnaturally acts that way). A few that we will focus on now include:

  • Improved Customer Performance – needless to say, customers are sensitive to sincere and real efforts to keep them satisfied.
  • Reduced Employee Turnover  – customer-first orgs a full of employees who are empowered to do the right thing, and are as a result much more highly motivated and loyal to their employer.
  • Lower Overhead, Better Margins – Customer-First organizations reduce complexity, have fewer levels of management to administer and have more focused innovation that increases success rates.
  • Improved Innovation – better customer insights derived from greater respect for direct customer relationships (rather than just more indirect research), drives more effective and relevant innovation.

The Elements of the Customer-First Org Model

One thing to note about designing your business this way – it does not happen in a day. Any good org model is an objective, not something that will exist simply because it was published and distributed to everyone with orders to make it happen. “Customer-First” is a culture that you build, and cultures don’t get changed easily. However, you can implement certain elements of the model that are representative of the attitude required to develop the culture you want. As a CEO, executive or other leader, it is important to remember that the things you hold out as visibly important are what will be reflected back to you from your people. If you are not willing to do the things yourself that you say are important to you and your culture, then others will not do them either. So what are the key elements to build a culture like this?

1. Serve Your Real Customer – Beyond our initial observation that “your manager is not your customer”, the logical build out of this concept is that your customer is who you work for. So your front line teams need to believe they work for the customer. Their supervisors need to believe they work for their teams. Those supervisors need to feel like their manager is working for them – working to make them successful! And so on…by “working for” your own employees, that means you are there to find every way possible to support them to be successful in the goals they have that were considered important to the success of your business. True leadership in this model means you are a supporter, mentor, counselor to the people you have chosen to help your customer succeed.

2. Invert the Risk Factors – One of the telling indicators of a poor closing rate and loyalty with customers is the perception of risk. The more risk that is perceived by a customer to purchase your product or service, the harder it is to gain the trust to purchase. Unfortunately, one aspect of the “Shareholder Value” era we have lived in for the last thirty years is that businesses increasingly look for ways to reduce the risk to shareholders, but at the cost of increasing the risk to customers through nickel-and-diming on products and services, decreased customer service, etc. These efforts often worked temporarily to improve “Shareholder Value” via greater profits, but usually at a cost of losing many of the best customers.

3. Remember Who Owns Your Brand – Consider your customer as the “Owner” of your Brand. This is important, as Coca-Cola inadvertently taught the world many years ago with “New Coke”, and as Netflix demonstrated more recently by seeming to think they could buck modern management history with their plan for self-dismemberment. It’s not something to be afraid of – it just means you have succeeded in creating loyalty for your business and love for your products and services. Respect for your new “owners” is the driving force behind good engagement and listening practices.

4. Evolve From “Owner” to “Mentor” – with ownership of your Brand now safely in the hands of your customer, as a leader you should be turning your attention to your culture. Nurturing, mentoring, training is where leadership is most effective. A team properly motivated to serve their customer requires very little specific day-to-day direction. Your job is to focus on the bigger things – Who are we as a business? Where do we want to be in 3-5 years? What resources do we need to make that happen? What’s the best thing for our customers (and what do they say about it)? Answering and evolving these questions over time and constantly reinforcing this big picture as part of your training and mentoring is the most valuable part of your work. You are, in a sense, building your culture.

An organization that evolves with these four pillars in place stands a much better chance of closing that “Delivery Gap” referred to above. Where do you see your own org in the model today?

Next Week:  For Parts II & III we will get visual and practical with the introduction of the conceptual org chart, some best practices and some specific actions any leader can take to start the transformation to “Customer-First”.