Category Archives: Strategic Alignment

5 traits companies must have to play in free-for-all energy industry

customer centricity in the energy_industry

Traditional electric utilities are on the verge of facing massive competition. The barriers to entry have fallen and a large number of new and old companies have entered the power generation business.

Numerous and diverse competitors non-utilitieshave already entered the electricity business. Wind farms are expanding. More than a hundred Silicon Valley startups are developing new power technologies. Many of these have venture capital funding. Several like the Bloom Box fuel cell, have the potential to transform the industry by bringing power generation to the home.

Real estate companies and builders are supplying rooftop solar on new homes. Schools, government buildings, and businesses are deploying their own solar panels. Chevron Energy Solutions, a Chevron subsidiary, is one of the nation’s largest installers of solar energy systems for education institutions

Tie this to consumer and business resistance to higher energy prices and an increasing drive to seek out lower cost alternatives and we will soon see the competitive floodgates open putting the traditional players with big traditional infrastructure investments at risk.

It is not clear where all of this is going to go.  Everything is in the mix – technology, the economy, politics, globalization and societal trends towards “green and clean”. The government plays a big part with its energy policy along with regulation, subsidies and incentives for varies parts of the industry.

The one factor that is common to the longer-term success of each player in this industry is the adaptability of its corporate culture. In this environment it must have a culture characterized by 5 traits:

  • Customer understanding and insight
  • Competitor awareness and foresight
  • Peripheral vision of industry changes and impacts
  • Strategic alignment around value for all stakeholders
  • Collaborative and empowered workforce

Those players that have these 5 cultural traits embedded in their DNA will be able to adapt to the rapidly changing conditions and challenges in this disruptive industry. Those that don’t will disappear or be acquired.

Could your business survive in a competitive free-for-all like this? Does it have the 5 traits required for success in any industry undergoing major market and technology shifts?

How to sell the change necessary to create a powerful customer culture

Making the Case for Culture Change

In today’s world of intense competition, disruptive technology and the age of the customer, we know that we have to change and our organizations must change to survive.

But, how do you sell change to others when you know that on average there will be about 20% of people who will support you and look at change as an opportunity, about 50% will be fence-sitters and need to be actively sold, and the remaining 30% will be actively resisting change. Your change strategy requires you to continually sell through both planning and implementation as you need to reinforce the benefits from change.

You will need a strategy that includes six essential elements as the foundation plus two important personal characteristics.

Six Elements of Strategy

1. Recognition of the need to change – usually created by real or perceived external threats to a business from market changes, new competitors or disruptive technology.  A strong and determined leader or leadership group must be aware of the need to change, recognize the effects of this “burning platform” and the urgency for action and be willing to take the journey. You, as the leader must lead the change, not delegate it.

2. Timing – the single most important component to gaining initial “buy-in” to the change that you are selling. The right timing can build the required momentum to get your colleagues, management and the boardroom excited about your idea(s).   You must possess extreme patience with the right amount of knowledge to determine your timing. You will need a small core of influential leaders from the 20% of change advocates and from the 50% of fence-sitters. As you build this group you will be able to sense the best timing in relation to the external threats impacting the parts of the business you are wanting to change.

3. Assessment of the current level of customer culture – the leader initiates an assessment of the culture to establish a starting position from which specific objectives and targets are established. This takes two forms:

A. Qualitative assessment of the culture from interviews of a cross-section of people in the business. This provides in-depth insight into the culture, it builds relationships and additional buy-in and reduces the risk of resistance to skill development and culture change.

B. Quantitative measurement of the level of customer culture benchmarked against peers. This identifies strengths and weaknesses in relation to business strategy. It provides focus and targets for a transformation plan.

4. Clarity of customer culture vision and goals – you and your “change team” need to craft and refine the vision, goals, strategy and priorities. This needs to have within it a sense of urgency that can be easily communicated and understood by your target audiences in the organization.

5. Development of a change plan – as a leader you and your team need to develop a roadmap of steps and a realistic time plan to build a strong customer culture.

6. Displaying credibility through competency and know-how – Showcase strong competency levels by assembling a diverse team that can help you execute and sell the change all the way through to the end. You will need people with a shared set of values and agreement on a broad plan for change and a willingness to follow the roadmap. Members also agree that market needs should drive organizational change towards a strong customer culture. The team’s role is to implement a change plan that engages the targeted parts of the organization in the change effort. You will need to set some achievable targets and be confident you can deliver to them.

Two Personal characteristics

A change initiative to create and maintain a strong customer culture requires continual selling. It takes time to achieve and tenacity to follow through. Desire and mental toughness are the personal ingredients needed for success.

1. Desire

Having the required tenacity, endurance and passion to sell change all the way through to the end is never easy and could be the ultimate breaking point to your successful change management and change leadership efforts.    It requires a level of desire that makes it mandatory for you to get your hands dirty throughout the ongoing selling cycle.   This means that you need to be ready to face uncertainty head-on and welcome the fiercest battles from those among the 30% who want you to fail.

Desire is not just being willing and able to tackle any tension points through the journey of selling change – but more so an ability to accept the fact that you must continue to sell the change as much as you lead it.    Selling change is difficult and it takes a special level of desire in order to translate something that may be difficult for others to see into something that is concrete enough for people to believe in.

2. Mental toughness

To withstand the resistance by those affected by the change you are selling demands mental toughness.    For example, you may have the will, the skills  and desire to sell change – but you may not be mentality tough enough to finish each task at hand.

Mental toughness allows you to “separate issues” and compartmentalize them in a strategic fashion that strengthens your desire (rather than weakens your spirits).

Do you have a strategy for change? Do you have the selling skills to sell it? If so, do you have the desire and mental toughness to follow through until you get there?

What you do screams so loud I can’t hear what you say

Actions are more powerful than words

Actions are more powerful than words

Customers are smart, they recognize pretty quickly if the messages you and your company are sending match up with reality.

You say you are customer focused but then you communicate poorly, deliver a product that doesn’t work and then I can’t get hold of you when I need a solution.

Unfortunately this is still a common refrain for many customers. This lowers customer expectations so much that companies that just get it right really stand out. Wow! you did what you said you would and it solved my problem……what a great experience!

Virgin is a company that really recognizes how to manage expectations.  This allows them not only to do what they said they would do but go the extra mile and surprise customers. This approach to exceeding customer expectations in turn creates more value and leaves their competition in the dust.

Here is Sir Richard Branson discussing how Virgin delivers on this approach:

“Doing things better doesn’t have to cost more – all it takes is a little creativity and attention to hiring, training and management…… rather than providing rules or scripts, you should ask them [employees] to treat the customer as they themselves would like to be treated – which is surely the highest standard”

Even if your strategy is not to focus on customer service as a differentiator ensuring your actions align with your words is crucial.

Ryanair don’t pretent to promise an outstanding customer experience, in fact in many ways it appears they go out of their way to treat customers poorly. They do however deliver on their fundamental promise “fly cheaper”.

The real problems come when companies over promise and under deliver. Do this consistently and customer trust erodes quickly.

Are your actions aligned with your promises?

“Culture is not the most important thing, it’s the only thing” – Costco’s Jim Sinegal

The Costco Experience

Customers walk in to buy six months worth of toilet paper and walk out with the latest flat screen TV and a case of French Champagne.

Where else would this type of consumer behavior be possible but at Costco, the US’s most successful warehouse club/retailer.

Costco has an interesting mix of customers, it tends to attract more affluent customers in as great a volume as lower income customers. It is very selective about the products it chooses and is always varying the merchandise on offer.

Customers tend to shop their regularly and come back for that intangible feeling that is created by the store’s atmosphere. It is always busy, goods are stacked in large warehouse style pallets, there is a “racetrack” style circuit that shoppers are guided through which means that get to see virtually everything on offer each visit.

Why is Costco successful?

One of the key reasons is Costco’s ability  to allay all the fears consumers have when making purchase decisions:

1. Will I get the right product for my needs?

2. Will I get the best price available?

3. Will the product be high quality

Costco takes the risk out of purchasing by having one of the most generous product return policies on the planet, I recall seeing a women return a vacuum cleaner that was at least 5 years old and considerably used. She was refunded – no questions asked.

Costco’s pricing is always tracking pricing of their competition both online and offline and driving hard bargains with suppliers to make sure they are super competitive. They mark up their products by 15% so if they buy at the right price that sales price will always be very competitive.

Costco carries well know often premium brands (they even sold Apple products for a time), their own Kirkland brand has built a reputation as a high quality store brand that reinforces Costco’s value leadership position (great quality/great price)

This strategy puts customers at ease, confident they will be getting great value on high quality products.

Another part of the strategy is to sell in bulk which means consumers buy more than they usually would of particular products. When consumers see the pricing they can get per unit on bulk purchases they can’t resist.

A powerful customer focused culture.

Jim Sinegal, Costco’s former CEO, in a recent CNBC documentary on the “Costco Craze” described the secret of Costco’s success was its culture. Jim has created a culture where there are no divisions between leadership and staff, everyone is on the same page when it comes to understanding Costco’s customers and what makes their model work. Every employee knows their role in creating the right environment for customer’s to have the “Costco experience”. Employees are paid fair wages (higher than competitors) that reflect their importance in contributing to the customer experience.

As CEO he is constantly on the move visiting Costco’s 580 stores across 9 countries every year, getting direct feedback from customers and his employees as to what’s working and what is not. Remember this is a $89 billion business.

How many CEOs set that tone for their organizations?

See more on the CNBC documentary below:

Inside the Box: What’s the secret to Costco’s success?

Great customer focused leaders – Jeff Bezos

Jeff Bezos - a Customer Focused Leader

Amazon, under the leadership of Jeff Bezos, has been a great success story. It really created the online retailing sector with an initial focus on books and now has expanded to sell just about everything that can be sold online. It has been an innovator with new cloud services, the online shopping experience and the Kindle.

Part of Jeff’s success he attributes to the idea of having no regrets, taking risks, and having a powerful customer focused mission to drive everything. These are three ingredients key for genuine customer focused leadership. After all being customer focused requires listening and understanding customers better than the competition. However, at some point risks need to be taken to use that knowledge to create new solutions that may or may-not hit the mark.

NO REGRETS

He is what Jeff has to say about his regret minimization framework:

“I projected myself to age 80 and I looked back…and I said, ‘What I want to have done at that point is to have minimized all the regrets in my life.’

When you are in the thick of things, you can get confused by small stuff. I knew when I was 80 that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn’t something you worry about when you’re 80 years old.

At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way, in the regret minimization framework, it was incredibly easy to make the decision.”

KEEP TAKING RISKS

As companies like Amazon grow, there is a danger that novel ideas get snuffed out by managers’ desire to conform and play it safe.

Jeff describes how Amazon deals with this issue:

“You get social cohesion at the expense of truth,” he says. He believes that the best way to guard against this is for leaders to encourage their staff to work on big new ideas. “It’s like exercising muscles,” he adds. “Either you use them or you lose them.”

A MISSION THAT DRIVES EVERYTHING

Another key part of Jeff’s leadership has involved a mantra to drive alignment of all employees around one mission – “to save customers money”

While their vision is publicized as “Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”

The mission is something I have heard from a number of employees in different parts of the company (IT, marketing, HR) and they say it drives everything they do. It creates alignment and focus around customers in a powerful way.

Does your leadership style include these elements?

What is the purpose of business?

What's the purpose of business?

Ask anyone this question and you will get a variety of answers, the most common being to make a profit. While certainly to make a profit is a requirement I don’t believe it is a business’s reason for being.

Most businesses start out with a problem that needs solving. This problem is one usually experienced by many others. The business develops services and products to solve this problem better than any alternative and WHAMO it has something that people will pay for!

Unfortunately what happens over time is the focus of the business becomes the profit it generates rather than the problems it solves for customers. This often results in short term profit maximization at the expense of customers rather than for their benefit.

The outcome of this short term profit focus often results in toxic cultures where internal groups work against one another rather than for the benefit of the entire organization. The original purpose of the business is lost and employees become disconnected.

By realigning the business with its customers and rallying around a single focus, maximizing outcomes for customers, businesses can find their way again and produce even larger profits.

Remember profit is the RESULT of creating the best possible outcomes for your customers not the other way around.

If you want to create this type of culture in your company, take the Market Responsiveness Index and find out where you stand today.

Does Facebook have a customer culture? Absolutely!

Facebook's Customer Focused CEO

With Facebook in the business news for all the wrong reasons, a cratering share price, slowing user growth and so on it is useful to think about exactly what type of culture Mark Zuckerberg has created.

In a recent letter to shareholders he made his position clear:

“Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.”

This is an inspiring larger than life vision, its not about making money, its about something that will motivate employees everyday they come to work.

Most great people care primarily about building and being a part of great things, but they also want to make money. Through the process of building a team — and also building a developer community, advertising market and investor base — I’ve developed a deep appreciation for how building a strong company with a strong economic engine and strong growth can be the best way to align many people to solve important problems.

Simply put: we don’t build services to make money; we make money to build better services. And we think this is a good way to build something.

This last sentence is particularly telling for me. This is the essence of a customer culture. It starts with creating value, creating services that solve problems for people. If you can do this well then money should follow as a result of creating value people will pay for.

By focusing on our mission and building great services, we believe we will create the most value for our shareholders and partners over the long term — and this in turn will enable us to keep attracting the best people and building more great services.

Here is the long term perspective I mentioned in my previous post. By not taking short cuts to boost short term profitability Facebook can take a balanced approach to investing in people, customers and provide returns for investors over time.

Although Facebook are currently not in our Market Responsiveness Index (MRI) database, I would expect them to be strong in all 7 of the customer culture disciplines we measure.

Its current challenges are the short term pain associated with becoming a public company. If it remains focused on creating maximum value for customers it will continue to be relevant and profitably long into the future.

For a great analysis of the full letter read Henry Blodget‘s article here

What’s your take on the Facebook culture?

The surprising truth about what motivates us..

One of the team recently shared a really great presentation about what really motivates us. The talk, by Dan Pink explores the real drivers of motivation for knowledge workers, that is, people in roles that require them to think critically and creatively about how to get things done.

He gives a number of examples from research. One surprising conclusion is that financial rewards work well for “mechanical tasks” but not for tasks that require more than “rudimentary” thinking. In fact when rewards were provided for more complex tasks, teams provided with the largest reward to succeed performed worse than those with little incentive!

It sounds counter intuitive but in my experience it really does rings true.

If we think about organizations that are really successful, they are not focused on massive financial rewards, they are focused on providing something that is really valuable for their customers. In fact many of today’s really successful firms are still trying to work out their business models, think Facebook and twitter…. they are still only focused on delivering value for customers.

Dan identified three factors were found to drive individual performance:

  1. Automony/Self Direction – the ability to choose how you spend your time
  2. Mastery – the satisfaction that comes with mastering a skill, developing an expertise
  3. Purpose – understanding the broader purpose and how your work contributes to that purpose.

There are parallels with our research into organizational culture. We have found 7 core behaviors that drive business performance and separate average firms from really great organizations.

I can relate them to Dan’s model for individual motivational drivers as follows:

  1. Autonomy is really about empowerment in an organizational culture setting
  2. Mastery – this is really about getting better, getting better requires feedback and insight. In our case getting better is faciliated by gaining customer, competitor and business environment insights
  3. Purpose – again in an organizational setting this is about vision, why do we exist and what do we want to be when we grow up as an organization? This is the factor we call strategic alignment.