A ‘Value’ Mindset is at the Heart of Customer Centricity

Value is the core concept of customer centricity

Andrew Kakabadse, Professor of Governance and Leadership at Henley Business School, UK, carried out in-depth interviews with leaders in more than 100 private and public organizations around the world to identify what is required for organizations and leaders to be successful. He came to the conclusion that the starting point for any successful organization or individual must be ‘value’. 

He says; “The insights from my research have a deceptive but refreshing air of simplicity: success is about delivering value and this is best and most reliably achieved through engaging with people, markets and data and then gathering evidence on that reality and making decisions accordingly.”

This research supports the notion that being customer-centric requires the creation and delivery of superior value to our customers. This ‘value’ mindset must prevail throughout the entire organization. Kakabadse found that ‘diversity of thinking’ is a key element in the creation of value. This enables, through teamwork and collaboration, a blending of ideas and viewpoints that results in innovative new products, services and processes that add value for customers. This should be supported by evidence – that is, feedback from and contributions by customers.

The Virgin Group has a mantra that says; “there is always another way.” This cultural norm encourages new ideas, differences of viewpoint.

IDEO’s core business is based on building new products using a diversity of viewpoints during their design thinking process. At IDEO they suggest there are three elements: inspiration, ideation and implementation. In their words: “Inspiration is the problem or opportunity that motivates the search for solutions. Ideation is the process of generating, developing, and testing ideas. Implementation is the path that leads from the project stage into people’s lives.”

When this approach to value is applied to building a customer-centric organization it galvanizes the change required to sustainably create and deliver superior value for customers. But it must become part of the customer culture.

You can find out more in The Customer Culture Imperative: A Leader’s Guide to Driving Superior performance.

Transforming IT is Crucial to Customer Centricity

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The explosion of digital technologies and acceleration of innovation is bringing IT into the center of the business – not because of IT itself, but because of its impact on customer experience and the business. CIOs are demanding their teams turn their attention away from internal issues to focus on external customers – a challenge that is difficult for many IT people to face.

Julia King’s article on how JetBlue, Chico’s FAS and PulteGroup outlines some of their initiatives to shift the IT mindset to external customers. (CIO, May 29, 2015)

JetBlue Airways went through an airport mapping process and found (what we as customers already know) that check-in was meaningless and added no value to the customer. In fact we might say it detracts value. The no check-in initiative is part of the company’s goal to deliver superlative customer service embodied in their mantra of “personal, helpful, simple.” An executive at jetBlue reports that to move IT to an effective level of customer focus requires a big mindshift. IT leaders have become immersed in customer connection programs, been sent to emerging markets like the Dominican Republic to better understand customer needs and tied part of their compensation packages to customer satisfaction metrics.

Chico’s FAS Inc., providing fashion clothing labels for women, understands the value technology can provide for its customers. CIO, Eric Singleton, and his 250-person IT team visit retail stores to see how consumers interact with a touchscreen that shows shoppers additional items not displayed in-store. This has added 15%-20% increases on in-store sales.

PulteGroup that provides new construction homes, decided in 2010 to launch a new mission to become more “customer-inspired”. It overhauled its IT function by appointing a director of customer engagement and a team of IT people under him all with skills that enabled them to positively engage with marketing people and homebuilders. Whilst they needed technical skills they were hired for their ability to walk into a model home and advise a sales consultant about their needs in a non-technical way. At Pulte they now talk of IT as part of the business and their role in creating value for external customers.

The next step for these companies and the many others that need to transform IT into a customer value creation function is to measure the level of customer centricity as an embedded culture in their group. The MRI (Market Responsiveness Index) is a validated tool that measures and benchmarks customer centricity of a company, business unit and function. This helps consolidate a focus on external customers and identifies priorities for initiatives that will embed customer value creation in IT and other functions in the business.

Customer Centricity Requires Resilient Leadership

 

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In practice, a customer-centric culture requires people in organizations to be able to adapt to change and provide new forms of value to their customers as an ongoing approach to doing business. Sustainable change demands resilient leaders at all levels of an organization. Resilience is often described as a personal quality that enables individuals to bounce back in the face of setbacks. Resilient leaders, however, do more than bounce back—they bound forward. With speed and commitment, resilient leaders take action that responds to new and ever-changing situations, even as they maintain the essential operations of the organizations they lead. (Reeves & Allison, 2009, 2010). But to be resilient a leader must have a vision of what is to be achieved, so that setbacks are recognized and opportunities acted upon.

Elle Allison in an article entitled “The Resilient Leader” outlines six practices of resilient leaders as follows:

  1. They engage in personal revitalization by taking time for activities to re-energize all aspects of life – physically, emotionally, spiritually and intellectually
  2. They communicate carefully to create a positive emotional climate in which the vision shines through to inspire individuals to create a better future
  3. They remain optimistic and use bad news and setbacks to galvanize action
  4. They re-prioritize initiatives and activities to overcome setbacks
  5. They continually work to cultivate new networks and sustain buy-in from individuals who are inspired by what the leader’s organization achieves and will provide support and resources
  6. They draw on diverse perspectives to make well-informed decisions that ultimately create new realities in their organization.

An example of resilient leadership was evident in the Virgin Trains saga in the UK. Tony Collins, CEO of Virgin Trains, had created a customer service culture over several years, successfully changing the ‘command and control’ culture it had inherited from British Rail. Collins, along with Richard Branson, showed resilience when the company lost its bid in 2012 to renew the British government franchise it had held for the previous 15 years for the West Coast passenger line in the UK. Supported by staff, unions and customers their resilience to progressive setbacks ended in a reversal of the government decision with a renewal of the franchise agreement.

Subsequently they also won a new franchise for the East Coast passenger service, having lost several previous bids for train services in the UK.

You will find the Virgin Trains story and the resilience required in The Customer Culture Imperative.

Why Collaboration is Key to a Customer-Centric Culture

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In our work with large corporations around the world we find that many of them are challenged by a siloed internal environment that works against a collaborative customer focused culture. Yet we know how important cross-functional collaboration is to driving value for customers that leads to superior business performance. Nowhere is it more clearly seen than in competitive team sports.

“Aussie Rules” football is a unique brand of football in Australia in which each team fields 18 players. It is so popular you can see more than 50,000 fans watching the game in many venues each week across the country. A study of the Hawthorn football team in 2014 found that they won their football games irrespective of who was in the team. Injuries and team member replacements did not change Hawthorn’s ability to win. Even when the head coach was side-lined through illness and the assistant coach took over for a period, Hawthorn continued to win. Superior teamwork as a culture was embedded in the team and throughout the coaching staff and administration. It showed out when they demolished the Sydney Swans – a team made up of several superstars – in the 2014 grand final. Hawthorn’s collaborative teamwork and versatility of players who could excel in many different positions on the field is legendary and has made them clearly the superior team in the competition in recent years.

In business, Ikea, the Swedish based furniture producer and retailer is one of the most successful global retailers. Ikea’s former CEO, Anders Dahlvig, puts the collaborative culture as central to the company’s success. He says: “As a company grows, the earlier you build cross-functionality, the more effective you will be.” He goes on to say with reference to Ikea’s quest to build a collaborative customer culture:

“I think the key thing was this: You have to be prepared not to promote strong performers who are great alone but not great collaborators. I see that all the time: people who are good at optimizing themselves, but cannot work with others. It’s really tough to say ‘You have to go’. But if you don’t get rid of these people you will never overcome your demons.”[i]

This is key learning from Ikea and shows it can be done in a business that is integrated from production through to retailing and operates in widely dispersed countries around the world.

[i] Ikea’s collaborative approach is reported in The Customer Culture Imperative, McGraw-Hill, New York, 2014, Linden Brown and Chris Brown, pages 148-149.

Why aren’t Public Service Organizations Customer-Centric?

(Photo credit: UCSF)

The Department of Motor Vehicles (Photo credit: UCSF)

Why aren’t many public service organizations like health, tax, education, transport and treasury or utilities such as power and water authorities customer-centric? Public service agencies differ markedly. Some have an exclusive franchise – public schools, police and roads that are taxpayer funded or water and electricity transmission monopolies that are customer funded. Others operate in competitive markets such as postal and parcel services.

But the case for customer centricity is compelling.

The Case for Customer Centricity

Countless studies have documented the link between organizational culture and organizational performance. Specifically, many studies show that a customer-centric culture drives superior service and value for customers resulting in an experience that creates customer satisfaction and advocacy. This in turn drives exceptional organizational performance in terms of productivity, new product/service success, innovation and financial performance.

Government departments and public service organizations have clearly defined missions to provide a service to their constituents. Each reports to a government official who is part of a central, state or local government that represents a community – much of which is made up of customers that experience the service. Poor experience leads to complaints, that in turn, ultimately affects votes for public officials if service is consistently bad.

Public service organizations that do not understand their customers’ changing needs, or worse, don’t care about their customers, will receive complaints that require additional resources to solve. This creates stress for both employees and customers and takes resources away from their core roles. The momentum and complexity of global change are challenging all organizations, including government agencies, to move faster, work smarter, use their resources more effectively and think further ahead.

Most senior leaders of these organizations know this!

What’s the problem?

Many public service organizations try to focus on their customers, but wonder why their customer service programs have not really worked. A key reason is that senior leaders do not understand the difference between customer focus and customer centricity.

If you ask different people in your organization whether it is customer focused or customer-centric you will probably receive a variety of answers. If you then ask them what they mean by that you will probably get many more. Often many senior managers believe their organization or department is customer-centric while others will strongly disagree.

Another reason is that public service organizations do not measure customer centricity and make it a key performance factor for assessing leader and team performance.

The best starting point is to agree on what customer centricity is and then measure it for your organization. This will get everyone on the “same page” and create the mindset and benchmark that enables you to focus on things you should do to strengthen it.

What is customer centricity?

Research tells us that customer centricity requires a particular culture – a shared system of values and norms (mindset and behaviors) that focus all employee activity on improving the customer’s experience. Values define what is important and norms define the appropriate mindset and behavior that leads to what people do.

Leaders of customer-centric organizations have found that customer centricity is defined by the capability of an organization to understand, predict and respond to customer, market and external environment changes. It is based on the mindset: “what’s best for the customer is best for the organization” and a set of employee behaviors where the customer is central to the decisions they take and how they are implemented. This does not mean that you give customers everything they want, but by understanding their current and future needs you are best able to deliver value that will satisfy them in meeting their objectives in a way that meets your own goals. Customer centricity should transcend all departments and functions and be an integral part of the way employees behave and perform.

How do you measure it?

There are now valid measurement tools available to benchmark your organization’s level of customer centricity. Based on empirical research two tools can be used to assess where you are. The Market Responsiveness Index is relevant to competitive environments and benchmarks the capabilities of your organization on 7 factors. The Customer Responsiveness Index (CRI) is relevant to the vast number of non-competing government agencies and utilities and benchmarks the capabilities of your organization on 6 factors. Both tools reach into a global database to enable you to compare your level of customer centricity against the best… and the worst. But more important they enable all staff to understand what customer centricity is and what actions you can take to embed it in your organization as a sustainable culture.

Three steps for getting started

The following three steps will create some effective momentum:

  1. Hold a forum of leaders designed to create awareness of what real customer centricity means. This may include a debate on whether your organization is customer-centric with one team taking the positive stance and the other team taking the negative view. This will expose different views and help people understand what “being customer-centric” means.
  2. Measure and benchmark your organization’s level of customer centricity and identify strengths and weakness on the customer-centric factors that drive your performance.
  3. Conduct a leadership workshop designed to review your strengths and weaknesses and develop plans to act on the most important priorities ensuring that all leaders are involved.

These 3 steps will lead you to actioning a customer-centric plan based on an objective understanding of where you stand, some milestones and targets to be achieved and a roadmap to get there.

You will find some valuable tools, case studies and examples to help you through these steps in The Customer Culture Imperative: A Leader’s Guide to Driving Superior Performance, McGraw-Hill New York, 2014 by Linden R. Brown and Chris. L. Brown. (The foundation of the research is in Appendix 1, pages 273-287.)

Why do companies fail to be customer centric?

Epic Customer Service Failure

I recently had the opportunity to deliver a keynote address at a large conference in San Diego. At the start of my talk one of the questions I like to ask the audience is:

“How many of you recently had a bad customer experience?”

More than 100 hands went up (probably 80% of those in the room). While this may sound dramatic, sadly it’s not unusual. Poor customer experiences are going to happen with any company you do business with at some stage. However great companies realize they will not get it right every time and make proactive preparations to deal with things that may go wrong.

Unfortunately the company in this next example fails multiple times on this front. It clearly does not have a customer centric culture. (Before you read on – full disclosure I have been a customer of this firm and this is based on my own experiences).

I am not going to name and shame the company but rather use it as an example of what not to do in business. It is a large fully integrated, international property and infrastructure group headquartered in Australia.

We are not talking about large corporate or commercial projects, but residential housing. The firm has has a number of residential housing projects around Sydney, Australia and no matter who you talk to, the experience has been bad. Poor project management and supervision of contractors and sub-contractors has resulted in countless defects. Now it’s not all bad – they do fulfill their legal obligations to fix defects thoroughly – so long as you are prepared to wait for them to do it at their convenience.

The thinking is: “we will get a painter, plumber or electrician to your house to fix the defect when there is someone in the area – or if we have several jobs to do in your area that we can group together”. Forget the fact that the hot water system has gone – you can wait 3 days before it is convenient for them to come. Forget the fact that the job of fixing a leak is half done – it can be weeks before it is completed. That is just the tip of the iceberg. Lack of response to consumer requests, poor communication and lack of a “customer perspective” all contribute to the heartache.

Yet this firm espouses some admirable core values – respect-collaboration-integrity-excellence-innovation.  However it’s vision: “to create the best places, supports our strategic direction to be the leading international property and infrastructure group” is predominantly internally focused.

Nowhere do we see the word “Customer”.

This firm reflects a retail building industry that is self-centered, arrogant and self-serving. Clearly not all building businesses and contractors operate in the same manner. But it shows what happens with large businesses that are focused on profit at the expense of the consumer. It results in dissatisfaction, anger and frustration on the part of the customer.

This firm and others like it have a huge change to make if they are to have any hope of delivering a consistently good customer experience. The start must come with senior leadership who need to find out what is going on and understand what many consumers experience. It’s called “eating your own dog-food”. If some of the senior leadership had the same experience with their own homes as many consumers they would do something about it. Then a customer-centric culture needs to be embedded throughout the organization – not just lip service, but real change of mindset and actions that create a much more positive customer experience.

There is a clear roadmap for this in the book – The Customer Culture Imperative – if leaders in these large businesses care to look. But then again while the business is profitable “who cares”?

This type of short-term thinking will only make things harder for businesses like these in the future, when new players exploit their lack of customer understanding and care.

 

Why real-time customer feedback is the future for customer centric companies

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Companies have been measuring customer satisfaction levels for many years and yet many of these same companies have not seen significant improvements or changes. One of the reasons is customer satisfaction research has been a static activity. Satisfaction levels are measured once a year or less frequency. The data is discussed and reviewed but is not integrated or used to drive business decisions. The result is a lack of action. Even worse customers make complaints which companies then try to address weeks after any useful resolution is available.

In fact this cycle of asking customers for feedback and doing little or nothing with it is one reason why most customers don’t respond to surveys. Why should customers spend the time providing feedback when nothing meaningful will be done?

One of the challenges facing companies trying to implement a more real-time approach in the past has been limited resources to apply to the challenge. Real time has required surveys been run more frequently and systems to be available to provide that feedback to the right people at the right time.

Thankfully with the technology available today, a number of companies are providing customer centric organizations with new tools to gather insights and feedback on the go.

A great example comes from the healthcare industry, more specifically hospitals. Patient Experience is something that Hospitals can no longer ignore as a large percentage of their at-risk income under the affordable care act comes from their patient satisfaction levels.

Eric LoMonaco, a great patient centered leader, from the Community Hospital of the Monterey Peninsula (CHOMP) in Monterey recently implemented a real time feedback program using QR codes placed strategically around the hospital.

qr-code used for feedback

The challenge they faced was satisfaction was measured by an external body that would provide reporting after the fact. The result was patients left the hospital with problems that were never addressed. Eric saw the opportunity to implement a system that would allow CHOMP to gain real time feedback that could be directed to leaders in the hospital and responded to in real time.

The impact of this system on patient satisfaction levels has been dramatic and immediate. By scanning a QR code or simply sending a text message directly to a leader in the Hospital, Patients are able to provide real-time feedback that leaders can address immediately as issues arise rather than after the fact.

Eric shares the results CHOMP has been achieved so far in a great article he wrote here and a webcast here.

With this type of technology available, the excuses for real-time customer satisfaction improvements are running out.

It is the combination of a customer centric mindset, coupled with technology and processes that will determine the winners in today’s business environment. To learn more about creating the right culture in your business, check out our book, The Customer Culture Imperative.