Category Archives: C-Level Quotes on MarketCulture

Does Intel have the right culture for the future?

intel's_customer_culture

In a question asking him to summarize the Intel culture, outgoing CEO (in May  2013), Paul Otellini said:

“Egalitarian. Merit based. That came from Noyce. Anyone can speak in a meeting, but you must speak with data. That came from Moore. Take risks. Embrace innovation, but do it with discipline. That’s Grove. World-class manufacturing came from Barrett. I’ve added a marketing component.

The other thing unique to Intel, at least in Silicon Valley, is the mix of older and newer employees. Intel has more 20-year-plus veterans than any Silicon Valley company. I’ve been here 36 years. Yet the average age of our global workforce is 25. Tradition and innovation. We like both.”

Intel’s culture seems to do everything to drive facts and reasons ahead of position and formal authority. One of Intel’s values is something like “constructive confrontation”.

Among large technology companies, only Intel has mastered CEO succession multiple times. Founded in 1968, Intel has gone from founders Bob Noyce and Gordon Moore, who both served as CEOs, to Andy Grove, Craig Barrett and now Paul Otellini without losing its status as the world’s preeminent chip manufacturer. It has had some major tests of its culture.

In the mid-1980s Intel’s memory chip cash cow was being wiped out by Asian competitors and its future star, the microprocessor, was still building. Intel faced scandal in 1994 when it mishandled news about flaws in its Pentium chip. In 2006, the newest CEO, Otellini, had to lay off 10% of workers in what now can be seen as a prelude to the Great Recession.

In 2006, when Ortellini took the helm, he tossed out the old business model. Instead of remaining focused on PCs, he pushed Intel to play a key technological role in new  fields, including consumer electronics, wireless communications, and health care. And rather than just microprocessors, he wanted Intel to create all kinds of chips, as well as software, and then meld them together into what he called “platforms.” He went about reinventing Intel as PC growth began to slow.

In addition top to bottom reorganization, he made big changes in the way products are developed. While previously engineers worked on ever-faster chips and then let marketers try to sell them, there are now teams of people with a cross-section of skills. Chip engineers, software developers, marketers, and market specialists all work together to come up with compelling products. Otellini is convinced such collaboration leads to breakthrough innovations.

Otellini has strengthened Intel’s financial performance and maintained dominance of its industry. The challenge facing the new CEO will be to keep pace with the changing mobile, tablet and social media environment. Intel’s culture took a battering with the major staff cuts in 2006 and again substantial cuts in 2011.

Will it be resilient and adaptive enough with a new CEO to strengthen the future focused, customer oriented culture that was a focus of Otellini’s reign? Has it retained its innovative capabilities? Only time will tell.

4 ways Electronic Arts navigated major Tectonic Shifts impacting their Customers

tectonic_shifts_in_technology_and_customer_impacts

Many industries today are experiencing market and technology shifts in their marketplaces that are somewhat like the clashing of tectonic plates that cause earthquakes and tsunamis. Industries including publishing and printing, education, telecommunications, media, advertising, health and retail are all facing massive change. How does an organization navigate a techtonic shift?

Electronic Arts Labels (EA), the world’s leading developer and publisher of interactive entertainment  faced a techtonic shift in 2007 with the rapid change occurring from retail packaged goods products to new digital delivery platforms. The new CEO at that time, John Riccitello, presented his vision as a burning platform – you are in the middle of the ocean on an oil platform that is on fire. You either hold on and ride it down or you jump off and face the unknowns of a swirling ocean.

In his article titled “Getting into your customers’ heads”, Krish Krishnakanthan finds out what EA had to do to navigate this techtonic shift. To transform from a retail products business to a digital supplier using new platforms such as social networks, mobile phones and tablets.

The key success factors:

1)   Measuring and tracking customer usage of games, external gaming-publication reviews (critical review success is linked with sales performance). For that part of the business with direct sales to consumers, they use technology to measure customer interactions and the lifetime value of each customer.

2)   Changes in the competitive landscape with low entry barriers and the emergence of small game developers has required  EA to restructure its business to give decentralized profit and loss control to product line/brand managers to enable them to compete with specific identified competitors.

3)   Enhanced communication and collaboration between development teams and marketing teams to co-ordinate go-to-market strategies.

4)   Scanning the external environment through consumer blogs and social media to identify new shifts in consumer opinion, competitive plays, new technology impacts on customers and economic forces affecting the market. This has required a culture change by EA. One which centers their whole business around the customer. An adaptive, future focused customer culture has enabled EA to cross the chasm created by the techtonic shift they faced.

Staying on the “oil platform’ would have meant riding the business to the bottom – out of business. Is your industry facing a techtonic shift? If so, check where you stand on “customer culture”. Is it strong enough to be adaptive and resilient to the storm ahead?

2 secrets of Salesforce.com’s success at attracting customers

customerculture_at_salesforce

Jamie Greney, a long standing employee says “In my ten years at salesforce.com, I think one of the most important elements to our success has been the corporate culture. We’ve had a consistent vision regarding the end of software. Three of our top values have been trust, customer success, and innovation.”

Alyson Stone, another company employee says “Depending on how you look at it, resolving a customer’s problem is the beginning or the end of a journey. Companies who decide to put the customer at the center of all business strategies and activities are making a commitment to engagement, yes. But more than that they are making an assumption that each customer is a long-term investment with a high rate of return.”

It is clear that Salesforce’s customer culture is embedded in the business and has been central to its ongoing delivery of value to its growing customer base. Salesforce is on Fortune’s 2012 list of the 100 Best Companies to Work For ranked number 27.

In a report titled “Salesforce’s happy workforce”, David Kaplin describes what happens inside the company.

 “There are plenty of reasons Salesforce is cool to work for: its downtown San Francisco vibe, its matchless end-of-the-year revelry, its embedded philanthropy, and its idiosyncratic leader.”

He quotes Marc Benioff, the CEO, “We achieved our market position by being born cloud,” Benioff writes in his book titled Beyond the Cloud, “but we are being ‘reborn’ social … We need to transform the business conversation the same way Facebook and other social sites like Twitter have changed the consumer conversation and created incredible loyalty — and love.”

Kaplan reports that Salesforce’s new social-networking app, Chatter, functions much like a Facebook inside a company — and helps enhance office culture. Whether on a computer or mobile device, Chatter is dynamic and collaborative — e-mail, by comparison, is static and private. In open groups or news feeds like Finance or Sales, multiple employees can share ideas in real time on projects, analyze data, and compare drafts. “I learned more about my company in a few months through using Chatter than I had in the last three years,” Benioff says.

At Salesforce itself — where there are about 3,000 daily Chatter posts, and internal e-mails have decreased 30% since Chatter went live — there are groups designed to get employees across departments and rank talking to each other about work life, including Tribal Knowledge and Airing of Grievances. Kaplan says you can’t post anonymously, so complaints and queries are rather tame. But it nonetheless generates a degree of cooperation unseen at large organizations.

When you think about it, by providing business software on the web as its core mission, the collaborative model that the company has with its customers engenders cross-function collaboration within each customer as they use the Salesforce software.

Success has many elements, but there are two secrets underpinning Salesforce that stand out:

1)   A Customer Culture as noted at the start of this post, is fundamental to Salesforce’s growth and profitability.

2)   Collaboration across functions and with customers fuels trust and innovation resulting in a happy workforce and more value for customers.

How strong are these cultural attributes in your company? What could you do to strengthen them?

Are customers at the heart of your business? Here’s what that means to Virgin

Customers at the Heart of Business

Image Source: http://www.customerattheheart.co.uk/

In a recent British Parliamentary Enquiry into the awarding of rail franchises to private companies, Richard Branson said: “Our customers are at the heart of our business”.

What does this really mean from a practical point of view to the Virgin Group? Well, as an example Virgin Mobile recently asked its Australian customers to nominate themselves to be part of a Virgin Tester Team. The successful Tester Team participants are sent the latest handset to test drive and asked them to review the phone model’s advantages and disadvantages via a two minute video. This is uploaded to Virgin’s YouTube page and the Tester’s own social media channels. Then they get to keep the handset.

This initiative is based on two bits of customer insight:

1)   Online consumer reviews are the second most trusted source of product information, only behind referrals received from family and friends.

2)   The growing trend on YouTube for users to upload videos of themselves , share them with friends showing the moment of newly purchased technology products.

This is an example of taking customers into the heart of your business based on customer insight and good business sense. By asking real people to review handsets openly potential customers are getting a fair and honest review by everyday people, not just the technology pros. It enables Virgin Mobile to obtain rapid and meaningful feedback from customers that it can use to continually improve the customer experience.

How can you bring customers into the heart of your operations?

Do your customers inspire you? How Virgin Rail was saved by its customers

inspired by customers

Sometimes our customers inspire us to great heights. 

Recently Richard Branson’s Virgin Trains created a major bureaucratic turnaround by sheer force of will and the inspiration of their customers.

On September 10th 2012, Richard Branson and his CEO of Virgin Rail, Tony Collins, were answering questions at a Parliamentary Enquiry in London initiated by Branson. This was about the awarding of the West Coast train franchise (London to Glasgow) to a competitor, FirstGroup – a franchise that had been held by Virgin Trains for the previous fifteen years.

Branson said: “We submitted a strong and deliverable bid based on improving the customers’ experience through increased investment and innovation.”

He added: “Our team has transformed the West Coast line over the last 15 years from a heavily loss-making operation to one that will return the taxpayer billions in years to come.”

Branson, who had considered abandoning the rail industry in Britain after this 4th unsuccessful bid (second each time), decided to put up a fight this time. It was not because of the money – he has plenty of that – it was because of the customers and the staff of Virgin Rail.

Buoyed by 170,000 passenger signatories to an e-petition supporting the company, rallying support from unions and staff, he decided to press the government for an investigation into the transport franchise tendering process and how decisions were made.

When asked on 10th September by a member of the Parliamentary Inquiry why he was objecting, he said: “The customer is the heart of our business”. He went on to say that customers and staff had given overwhelming support to him and the CEO, Tony Collins, and he did not want to let them down. The growth of over 10% per annum in passenger numbers over the previous 10 years was testimony to the customer appeal and quality of the service provided.

The parliamentary Enquiry overturned the decision to award the franchise to the competitor, citing irregularities and lack of transparency in the bid decision.

Here is a man who believes that the most important thing in business is to have satisfied customers and fully engaged, happy staff around a customer culture that delivers increasing value to all stakeholders – and he has proved it in Virgin Rail and other Virgin businesses.

This only happens when your customer culture is so strong that your customers not only like your products and services, but they love you and your organization. When the going gets tough, your customers will “go in to bat for you”.

Would your customers help save your business?

12 Lessons from a CFO that created a Customer Culture in the finance function

Culture Transformation

In my last blog post I described the customer transformation experience of the Finance & Administration support function in Telstra, a $25 billion Australian telecommunications company. Their CFO developed and implemented a vision of a “value service culture” (known as VSC) in which leaders and individuals viewed their stakeholders as customers and found ways of increasing the value (actual and perceived) they delivered to them. This transformation created a $15 million bottom line impact

In this post I summarize their 12 key learnings from this transformation.

  1. The senior leaders’ passion, ‘walking the talk’, ongoing monitoring and follow-through is critical to success
  2. Initially there is need for a Customer Engagement Council that guides the culture change. It works best if it is relatively small (5-8 members), has a mix of senior leaders and opinion leaders and focuses on overall planning and key initiatives. As embedding of new behaviors occur and support systems are implemented there is less need for such a group as responsibility is spread throughout the organization.
  3. Linking a culture change to a long term corporate or business strategy creates relevance and reduces perception that it is a fad.
  4. A set of guiding principles that reflect an emphasis on corporate values such as empathy and transparency is important in changing mindsets to embrace customer needs. It is necessary to continually emphasize these principles with practical examples to create the new cultural norms.
  5. Creating an emotional connection to the culture change and acceptance of a logical reason for urgency to change takes time in a large group. Creating a sense of fun, competition and reporting of “wins” in the short term can accelerate the diffusion.
  6. For Corporate Support groups that have limited experience in thinking about what they deliver from the customer’s perspective and lack a mindset related to delivering perceived value, the launch phase should provide concrete guidelines at the outset. A comprehensive communication strategy that continually provides examples of the new desired activities usually needs dedicated resources and focus to provide clarity.leading_culture_transformation
  7. Collaborating across lines of business can speed the desired cultural change across an organization. In disparate functions it takes time to find common ground for sharing. An initiative like VSC creates the common ground. Cross-fertilization of best practices makes the cultural change more exciting and effective and demonstrates to new staff the relevance and scope of the customer responsive culture. It also promotes collaboration and innovation.
  8. A clear framework and measurement toolsare vital to guide improvements and reinforce desired behaviors. These include:
    1. Customer culture measurement as a starting benchmark, then for tracking culture improvements
    2. Customer satisfaction metrics that point to areas that need improvement
    3. Customer focus behavior norms incorporated in manager and staff reviews and their key performance indicators.
  9. Technical people who have little experience in treating colleagues as customers will require a set of new tangible skills as well as an emotional connection that sees personal value in doing things differently. The emotional connection is essential for people to take “ownership” of the customer’s problem and follow through with a solution.
  10. Well structured workshops are valuable to alter mindsets and provide skills. These should be implemented as early as possible to provide immediate ‘how to’ concreteness to the desired change in behavior. Workshop attendees who represented all lines of business and all levels were generally inspired by the VSC initiative. Train-the-trainer follow-on enabled them to reinforce their skills, train others and leverage the benefits for the wider group. Also, management workshops to evaluate their own VSC behaviors as role models were useful in presenting a common picture of VSC across the entire group.
  11. People at all levels need to understand that behavior change is difficult. It takes more time than expected to embed new behaviors in an organization, particularly those that require new skills as well as a new mindset. A strong ‘command and control’ hierarchy is present in many corporate support functions because of compliance requirements. It takes substantial and continued effort to break the “police” mindset to enable people to take customer initiatives freely and without fear. Initiatives emanatingfrom the lower levels in the organization need to be encouraged, nurtured and reported.
  12. Culture change can be effected more rapidly in smaller groups, particularly roles that are consultative and rely less on systems that may be unaligned to customer needs. This means that in large groups, the new culture mindset, skills and processes must be effectively taken into all of the small sub-groups as quickly as possible to have the greatest chance of making them stick.

A culture change that produces a customer responsive organization makes culture one of the most valuable assets of a business. It is a organizational capability that can and should be measured and the profit impacts assessed. The end result of this VSC transformation was annualized savings and benefits of $15 million after an 18-month period. These benefits increased as the customer culture became more embedded.

Interested to find out more about how to measure and manage a customer culture? Visit our resources page here.

How CFOs can use a customer culture to deliver $15m to the bottom line!

Internal Customer Culture

A lot of the discussion about building a more customer focused organization centers on the customer facing parts of a business. While there is no doubt major improvements can be driven by sales, marketing and customer service, the real turbo boost to organizational performance comes from support functions that creates a culture around their internal customers.

“If your not serving customers make sure you are serving someone that does”

 Corporate Support functions like Finance, IT and Operations have the potential for releasing huge gains to the business in terms of cost savings and profit improvement. How? By developing a culture where they see their internal stakeholders – that is those to whom they provide their services – as customers.

When they develop a “customer” mindset they think about the value (or lack of) they are providing. They stop delivering reports or services that have no value to their customers and focus on things that will increase value.

John Stanhope, CFO of Telstra, a $25 billion Australian telecommunications business set out to transform his Finance & Administration Group of 2500 people into a support group that would create new value, provide top service and be seen to be valuable by its customers. He painted a vision of what he called a “Value Service Culture” (known as VSC) in which he wanted all his staff to identify their internal (to Telstra) customers and deliver services of value to them. This journey from 2008 to 2012 was an outstanding success.

“We have delivered $15 million per annum in recurring gains from stopping non-value services and activities while creating more value in those services that were needed by our customers. This translates to an additional $55 million added to the value of our business.” – John Stanhope, CFO, Telstra Corporation, 2012.

An investigation by Telstra’s Finance & Administration group of estimated gains and savings conducted in 2010 showed annualized gains and cost savings of $15 million for 2009 representing added value to the business of $55 million.

These gains were derived from analysis of specific initiatives by:

a)    Credit Management acting to collaborate with Telstra customers to reduce bad debts, cost savings from less follow-up calls and longer customer retention periods.

b)   Risk Management & Assurance collaborating with internal customers through an education initiative clarifying compliance requirements and streamlined processes for reducing work for both parties. Cost savings from labor savings.

c)    Corporate Security and Investigations working with Telstra retail shops to provide better processes, follow-up and liaison with those shops most targeted by consumer fraud. Reduction of fraud yielded large cost savings.

d)   All finance and administration groups engaged in activities to reduce duplication and eliminate non value-add activities and reports resulting in measurable savings.

Care was taken to attribute only those gains and savings that could be aligned with VSC initiatives to do with understanding customer needs, providing greater value for customers, monitoring customer feedback and collaborating with customers to deliver the Group’s fiduciary responsibilities more efficiently. Later analysis showed these gains were continued over 2010 to 2012.

Stay tuned for my next blog post in which I will summarize the actions vital to Telstra’s VSC success and the lessons learned from this transformation experience.