What are the challenges of succeeding in business in the 21st
century? Ask leading companies and you would come up with the same list:
- Competition is fierce and global.
- Customers have become rebellious.
- Customers are promiscuous
- Customers
have expectations like never before.
- Customers demand choice, comprehensive information
and the best price.
- Customer know more about your service and product than you do (the prosumer)
Former IBM boss Lou
Gerstner called this “commodity hell” and that is pretty much the nightmare for
every business. With a list like this many businesses would claim to be already
embracing the challenge and becoming customer centric with ‘voice of the
customer’ initiatives.
This is simply a collective delusion and is the root
cause of why so many are failing the customer, the shareholder and their
hardworking employees.
The delusion is easy to understand. Businesses have created
departments that claim customer focus and extensively poll customer wants, seek
feedback and then try to act on the information.
While this creates an illusion
of progress it is to a large part a futile exercise focused on fundamental misunderstanding of 21st century customers.
Asking internal
questions based on customer data results in such questions as “how do we
improve service?”, “how can we reduce non value added work?”, and “how can we
standardise?”.
This thinking stems from a time when the world turned more
slowly and is more appropriate to the 1950’s then this centuries new business
reality. To orientate to long term business and customer success we need to
look at the enterprise from the Outside-In (OI) rather than inside-out. It is now
about understanding customer needs (not wants) and eradicating all the things
that do not contribute to achieving Successful Customer Outcomes (SCO’s).
It is this
Outside-In philosophy that leading global IT retailer Best Buy utilised to lead
and dominate the consumer-electronics market in the US. In doing so Best Buy’s
programme ‘customer centricity’ took the time to understand customer needs and
accordingly align for the SCO, while long time competitors Circuit City and CompUSA
struggled and ultimately went bust. Circuit City, previously successful in the
1980’s and 90’s did not understand the shift to Outside-In and continued to
focus on reducing costs through laying off its highest-paid hourly employees,
including salespeople, and replacing them with cheaper workers. At the same time
(2007), then CEO Philip Schoonover rewarded himself with $7 USD million in
compensation[i]. Customers don’t
like that old style way of managing business and voted with their feet.
Best Buy
meanwhile moved to understanding the customer needs and directed their
attention organising themselves accordingly. Early research suggested that men
look for a specific product at a discount price so hence, arranging stores
around fast moving products, geared to guys worked in areas where the majority
of shoppers were male. Alternatively in stores frequented by women the stores
focussed on ‘bundles’ as women were shown to need say a digital camera with
accessories such as cables, printer and other ‘value adds’. This was more
important to that type of customer than discounted prices. As the Outside-In
maturity grew audio-visual experiences were grouped together and themed as with
the Magnolia theatre. Family oriented areas are now a familiar feature coupled
with additions such as techie savvy Geek squad means Best Buy dominates a
previously fragmented market. Their success is now being extended to Europe.
Making the leap
from understanding to action requires a shift in perspective. Instead of
functional specialist silo’s organised around division of labour and specialisation,
enterprises rethink their centre of gravity. In what we call a Copernican shift
the customer becomes the centre of the universe, rather than the legacy model
were business organises itself inside-out as a pyramidal, left to right, top
down structure. In these legacy
structures it is sometimes difficult to actually include the customer on the
map – they are relegated to the extreme left or right, or into warlike metaphors
such as ‘the frontline’. No great surprise that people working in these
structures can be working very hard doing things right (following procedures,
delivering projects, meeting departmental objectives) but really the customer
isn’t their job. That surely belongs to someone else in marketing, sales or
customer service? In the Outside-In world the customer touches everybody’s job and the emphasis shifts to doing the
right things and doing things right.
Breaking out
of the straight jacket imposed by the inside-out organisation structure
requires a different level of thinking, an incisive set of new techniques and
tools, and a willingness to link every element of activity with SCO’s. A new
focus embracing the customer experience as the process requires a renegotiation
of partners, a realignment of relationships and investment in staff to ensure
they can think and be customer centric. Reward structures become linked to
customer success, rather than paying staff for turning up and following
procedures.
Best Buy have
broken the mould of their sector, as have others including Zara in fashion
retailing, Southwest airlines, FedEx Office, Emirates, China Mobile, Disney and
many more. These companies are the leading success stories of the 21st
century and understand the game has changed forever.
For most
businesses today, adopting an Outside-In approach is a necessity for survival —
the only sure way to ensure the organizational resilience that will keep a
company out of the death spiral of inside-out commodity hell. The path finders
have set the standard and established a winning set of approaches, tools and
techniques readily accessible by all.
You may want to make that move now, before it is too
late.
Enterprise BPM & Outside-In Resources - videos, presentations and upcoming conferences
With that in mind I have turned my attention to a genius of time management, managing conflicting interests and on the whole being hugely successful at such a young age.... James Dodkins. Here are his tips for pre Armageddon (and tuning in to deliver that project success).
