What does Customer Centric Leadership look like?

There is plenty of research and anecdotal evidence that tells us if customers believe “we care” about what we sell them, how we serve them and the relationships we create with them, they will remain loyal advocates of our company. This also applies to the “care” senior leaders show to their staff and partners.

This is no better illustrated than by Howard Schultz, CEO of Starbucks. In the immediate wake of the stock market turmoil around the world on 24th and 25th August, Schultz sent a letter to all his 190,000 staff and partners. As well as assuring them of Starbuck’s continued growth plans despite the stock market volatility and sending his appreciation of their efforts in making Starbucks the number one coffee company worldwide he urged them to think of how their customers might be feeling in relation to this immediate uncertainty He encouraged them to show special care to their customers as follows:

“Our customers are likely to experience an increased level of anxiety and concern. Please recognize this and–as you always have–remember that our success is not an entitlement, but something we need to earn, every day. Let’s be very sensitive to the pressures our customers may be feeling, and do everything we can to individually and collectively exceed their expectations.”

Source: http://www.inc.com/justin-bariso/starbucks-ceo-sent-an-extraordinary-email-to-employees-due-to-the-stock-market-c.html

By being attuned to customer concerns in their everyday lives Schultz was able to translate this stock market event into a communication to staff and on to Starbucks customers that he and they care.

This is a great example of customer-centric leadership. It costs you nothing, but adds to the customer experience in a way that connects emotionally and creates loyal customers as advocates.

Empowering Employees to do the right thing for customers

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When we measure the customer-centric culture of organizations around the world, one of the recurring themes is a low score on “empowerment”.

Lack of empowerment – real or perceived – has a huge impact on the ability of frontline staff to solve a customer’s problem. It also has a big impact on costs and is seen in many ways – duplication of work, mixed messages to customers, bottlenecks and slowdowns in customer service, and new product introductions – just to name a few.

For frontline staff to be empowered to solve customer problems or rapidly respond to customers’ requests a business needs a culture that encourages staff to be accountable for ensuring a solution for the customer is delivered. They need to have the confidence to make a decision that is right for the customer without fear of retribution from their managers if it seems to cost the business money. If they can’t fix it themselves they need to be confident that those who are alerted to the issue will fix it for the customer quickly.

A great example of this is seen in the hospitality industry. Chateau Elan, a boutique resort hotel with a property each in the United States and Australia has created an empowered culture in which a customer can ask any member of staff to do something for them – book a restaurant or a cab or get extra towels in their room. The immediate response by the hotel employee is “consider it done!”

This is an emphatic promise to the customer that it will be done. Not only does it give confidence to the customer but it empowers staff to collaborate and ensure the customer is satisfied.

How do you go about creating a customer culture of empowerment in your business?

What sport can teach us about customer centricity

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Sporting clubs refer to their customers as fans. This is an appropriate term because “fan” is shortened from “fanatic”. Successful sporting teams have fanatical supporters who are typically lifelong supporters of their sporting club and team.

Take the Seattle Seahawks, a professional American football franchise playing in the National Football League (NFL). Seahawks fans have been referred to collectively as the “12th Man” representing such a supportive force for their team that it is like having an extra man on the field. The Seahawks’ fans have twice set the Guinness World Record for the loudest crowd noise at a sporting event, first on September 15, 2013, registering 136.6 decibels during a home game and again on December 2, 2013, during a night home game with a then record-setting 137.6 decibels. This has occurred, in part, by customer-centric design because their new home stadium was purpose built so that fans would be closer to the field of play than in other stadiums and could urge their team on with such noisy enthusiasm that the opposing team could not hear the “plays” being called. This was a competitive advantage that resulted in almost all home games being won by the Seahawks in the last couple of years.

In 2014, the Seahawks won their first Super Bowl Championship, defeating Denver 43-8. More than 600,000 people turned up for the post match celebration in Seattle – about the number of its total population. The following season, Seattle advanced to Super Bowl XLIX, their second consecutive Super Bowl, but they were narrowly beaten by the New England Patriots by a score of 28-24. This kind of fan support is planned and nurtured by the Seahawks senior leadership, management, coaches and players with a special stand in the stadium named as the 12th Man, special events for fans and online connection that is devoted to engaging fans with the team and the club. This type of support occurs because the fans are at the center of thinking and decision-making.

Imagine if your customers were like the Seahawks fans – vocal, loyal advocates that are fans for life. How would that affect your bottom line? How would it affect your staff engagement? The answer is obvious – it would affect both very positively and create sustainable profitable growth.

But to do it you must have a customer-centric culture that focuses on creating superior value for your customers and puts long term customer relationships ahead of short term profit. Like in successful sporting franchises, everyone in your business has a vital role to play in creating and delivering value for your customers. You can find out more on how to do it in the The Customer Culture Imperativejudged the best marketing book 2015.

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.