Category Archives: Change Leadership

This is why playing it safe is the biggest risk for legacy companies

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Making pizzas seems like a simple business. After all its been happening for centuries and it seems like almost anyone can do it. But to make a sustainable business out of it and maintain an appealing brand in today’s competitive world requires a customer centric leadership mindset.

A starting point for Domino’s change from an ailing pizza maker in 2010 to a growing food business was a leadership change. Patrick Doyle became CEO in 2010 after Domino’s had experienced several years of stagnating business and declining share price. Doyle realized that he could only revamp the business if he could lead and create a mindset change in staff – a change from an “omission bias” where people worry more about doing something different than no change and “loss aversion” where the focus is on not losing rather than winning. I remember the great American motivational writer and speaker Zig Ziglar saying “.. the fear of loss is greater than the desire for gain”. Doyle realized that playing it safe was the riskiest course of all and he needed to create a mindset in the business that change is a necessity and a learning mentality in which for staff “failure is an option”.

A Customer-Centric Leadership Mindset was Needed to Transform Domino’s Pizzas

The change in Domino’s strategy came with a big picture view and a realization that they were not only in the pizza-making business but also in the pizza-delivery business and how this fundamentally affected the experience of their customers. This meant becoming just as much a tech company as a pizza company to transform the way customers could order and monitor the status of their order using a Domino’s app. Other apps were created to enable customers to provide feedback and become involved in games making ‘virtual’ pizzas.

Staff needed to be open to customer criticism to help them make better pizzas that customers would love eating as well as keeping them warm enough by the time of delivery. So Domino’s took on board customer views of how bad the pizzas were and suggestions on what to do to improve them.

Customers’ frank views were aired in advertising and social media and created a transparency and honesty that enhanced brand trust. Domino’s used staff in ads to describe how they had changed recipes and ingredients to make better tasting products. The company created a delivery car with one seat and a warming oven for up to 80 pizzas. It modernized its image to create more of a sense of style and a sense of humor. All of these things were needed for success. Here is 4 minute video describing what they did:

But the foundation for creating this change to a more agile, customer-responsive business came from the customer mindset brought by the new leader and embedded in the business in a way that enabled them to change and transform. As one senior leader told me recently it is the focus on the customer and their changing needs that is the motivator for leaders and staff to change!

Domino’s business results prove the point. Today, it is the second-largest pizza chain in the world, with more than 12,500 locations in more than 80 countries, and up from a share price of around $8 in 2010 to one of $215 in June 2017.

Learn more about what a customer centric culture and mindset are by reading our book, the Customer Culture Imperative.

Why are so many customer-centric leaders on their own?

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Many customer centric leaders we have spoken with are facing challenges they did not expect. While they themselves understand the imperative for a customer culture that will drive future business performance and sustainability and act as role models in leading the business in this way, so often they feel alone and frustrated at the top. Despite their best efforts their leaders don’t see it in the same way.

Why? Because their direct reports are still operating with a functional mindset. Or they see proposed initiatives to strengthen the culture to improve customer experience as extra work they don’t have the time for. Or they don’t understand what it means to be a customer-centric leader and why it is critical in today’s disruptive business environment. And this is spiraled down to middle management and to the people who report to them.

This is perpetuated by managers’ KPIs that are primarily functionally focused. This creates silos, lack of collaboration and lack of effective support for organization-wide initiatives.

This is not solved by ad hoc efforts to get people on board.

It requires a commitment to an organization-wide initiative that measures and benchmarks the current level of customer-centricity and engages leaders at all levels for the their inputs. It requires the development of a customer-centric strategy designed to align people with purpose and job relevance that connects the value they deliver to the customer. It needs to create a focus on easy to understand, credible and robust organization-wide customer metrics that everyone can buy in to. This needs to be part of an implementation roadmap of digestible steps that inspire people to participate in and carry through.

Above all, this must be tangible, meaningful and actionable.

Often the hardest part for a senior leader feeling all alone and frustrated by his or her team members that don’t ‘get it’ is to make a start.

The best place to start is to get a tangible benchmark of where we stand today as a business against the most customer-centric organizations in the world. This assessment involves the participation of all leaders and places a mirror to our business. The Market Responsiveness IndexTM (MRI) is a powerful tool to help you get your team on board. It is an assessment tool that will show you that you are not alone – in fact there are many others in different parts of your business and at different levels that think just like you do.

And they, just like you, want to make a difference that counts.

How to create a customer centric transformation – Lessons from Air New Zealand

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A little more than a decade ago Air New Zealand posted the largest corporate loss in New Zealand corporate history. Inside 24 months it was turned around to a profit. Since that time it has been amongst the consistently highest profitability of full-service airlines around the world.

The catalyst for this change was Sir Ralph Norris, who was called in as CEO to transform the business. Sir Ralph’s customer-centric leadership and customer focused strategy was embodied in the mindset change from “we fly planes” to “we fly people”. He immediately engaged the top 800 leaders in Air NZ to think about, discuss and act on insights from customer feedback and observation that told them about what customers valued and what they hated about the flying experience.

His legacy, established over several years as CEO of the airline, has been continued by the current CEO, Christopher Luxon. You can see it when you fly with Air NZ – even the safety announcements are engaging as they feature some of New Zealand’s star rugby players, spectacular scenes of the country and references to some famous movies made in the country….

This is a testament to the sustained revenue and profit that can be generated by a culture and strategy embedded in the belief that “what’s best for the customer is best for the business.”

See The Customer Culture Imperative for a roadmap on how businesses like Air New Zealand have done it.

How do you get employees to care about customers?

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This is a question I often hear from leaders of large companies that want to create customer centered organizations.

It is one of the key challenges of becoming customer centric.  Here are a couple of ideas that we have seen work well.

Recalling your own Personal Customer Experiences

Given we are all customers of someone, at some stage in our lives, we can all recall having a great customer experience or a really bad customer experience.

We run an exercise with leaders and employees of our clients that is a really effective way to build empathy which hopefully leads to compassion for customers.

We ask them to recall the best or worst experience that have had and to break down the elements that made up that experience, why did it stick with them?

More often than not this experience brings back strong emotions, participants get excited or even angry recalling their experiences.

At the end of the exercise we ask participants, has your organization created any of those really great or really poor experiences? Most people will admit yes so the question is why do we as an organization allow those poor experiences to happen when we know how powerful the positive experiences can be?

As you can imagine this fosters great discussion and engages people emotionally and intellectually in firstly understanding why it happens and then what to do about it.

How can we help you

Creating a Service Mindset

Ultimately everyone in an organization is there to help others get their jobs done as well as their own, it is this combination and collaboration of people that creates compelling value. Think about companies like Apple and Amazon where smart teams of people work incredibly hard together to bring their products and services to life for millions of customers.

Building a service mindset helps all employees think about how they can help other parts of the organization be successful so that they can all win in the marketplace. A service mindset requires all employees to think about the impact of their decisions and work not only on customers but other teams across the organization.

Hear from Customers Directly

A key challenge in large organizations is the distance many leaders and employees have between them and direct customer feedback. There is nothing more powerful than hearing directly from customers. It is simply not the same to hear something second hand as it is usually devoid of emotion and context.

As a result another exercise we encourage is having leaders and employees hear directly from customers in open forums or focus groups. The goal is to not just get information or new insights but to gain a sense of how customers really perceive the organization and their top of mind issues. More often than not participants gain valuable new insights into how customers really think about their organizations.

Give people permission to care about customers and then expect it

It sounds strange but in many organizations customers are an afterthought. People are not encouraged to really think about customers in their decision making processes. There are limited rewards or recognition for people that go the extra mile for customers and as a result there is limited upside or downside.

The result is a lack of real passion for customers outside of a small number of salespeople who live and breath customers as their personal livelihood. We know however that this is simply not enough. Customer passion must be pervasive across the organization for both the customer and the company to benefit.

Leaders can give people permission to care about customers by demonstrating that they care through their actions. Then over time they need to expect employees to care and simply not tolerate bad customer experiences.

A great story comes from the NRMA in Australia (similar to AAA in the US), the leadership gave their employees permission by suggesting they could:

“Break all the rules for the customer”

One of NRMA’s services is roadside assistance. They have many great stories of NRMA staff going the extra mile for customers when they are at their most vulnerable, i.e. stranded with their broken down car. One emergency roadside assistance employee even dropped a customer’s groceries to their home so they would not spoil!

What else can you do to ensure employees act in the best interests of customers as well as the business?

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.

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.

Is Telstra Australia’s Amazon? – Its Customer Centric Strategy is Paying Dividends

Making Customer Connections

While some may argue you cannot compare a telecommunications company with an online shopping mega star like Amazon, I beg to differ.

There is one core element both companies now share – their absolute commitment to being customer centric.

In 2009 when David Thodey took over as CEO of Australia’s largest telecommunications company, Telstra, he was asked what would differentiate his tenure from his predecessors. He said:

“I want to be an agent for the customer”.

It was a time when Australia’s highest profile company was being criticized on all fronts for its arrogance, poor customer service, unjustifiably high prices and monopolistic practices.

Thodey set about changing the culture at Telstra to a customer focused culture and invested heavily in defining and communicating internally a vision, values and strategy that had the customer at its center and customer service as its catch-cry. It included intense training of its 5,000 people leaders in Australia, India and the Philippines as well as new systems and processes that empowered customer facing staff to provide much better service to customers and solve their problems with least fuss. A new division was set up that enabled staff who heard of a friend’s problem at a barbeque to give them a direct line to a solution if they were having trouble getting it solved. Telstra embarked on a program to create advocacy with its customers and its staff. Use of the net promoter measurement system with daily feedback from thousands of customers fed to the areas in Telstra responsible was a trigger for focus on customers. Other customer feedback measures and progressive culture assessments have supported Telstra’s customer-centric journey.

Telstra: Improving Customer Advocacy

Now it is paying dividends. The company has posted seven successive half years of earnings growth to AUD$2.1 billion for this latest half – up 21% on last year. Dividends have been steady, but are now set to increase. Telstra is on a roll with its customer-centric strategy and stronger customer culture proving Thodey’s stance. Stock price is at an all-time high at around AUD$6.50 per share with steady and continuing growth up from around AUD$4.50 two years ago.

Telstra posts 22pc net profit rise

David Thodey is the first to say that Telstra still has some way to go. But his leadership of a strategy and culture in which the customer is at the center of decisions and service delivery is creating a highly sustainable profitable business.

If you want to see how it all began you will find it was originally initiated first in the Finance Group at Telstra and described in a case study about the CFO’s value service culture initiative. See Case Study Highlight: Telstra Transformation.

Telstra’s transformation story can also be found in “The Customer Culture Imperative: A Leader’s Guide to Driving Superior Performance”