“Customer-centric” has become the new buzzword thrown about at most executive planning sessions.

 

Do your company’s mission and vision statements place the customer at the center of your universe? Do they promise to maximize customer value and deliver the best customer experience possible? If they do, they are surprisingly similar to nearly every other organization. And, much like them, chances are your organization is struggling to make this vision a reality and actually reinvent itself as truly customer-centric.

“Customer-centric” has become the new buzzword thrown about at most executive planning sessions, and has replaced “innovative” as the new, mandatory strategic language. The truth is, it takes a lot more to become customer-centric than changing the company vision – it requires a departure from years of tradition, a clear look at who and what your organization is and a deeper understanding of what motivates your customers to buy from you. Fortunately, the cost to make this change is surprisingly low, while the benefits and returns can be shockingly high.

Finding Your Customer
“Customer-centric” implies that the customer is central to the organization, but this is too esoteric to have any real meaning. How does the customer fall somewhere between the receipt of raw materials and the delivery of a product? The organization turns the materials into a product or service, which is then sold. Everything the organization does must lead to this event. This logic works for most people and most organizations, and it logically follows that the focus should be upon the creation of the best possible product or service, because this is what causes a prospect to become an actual customer.

This logic fits nicely with traditional thinking. It was popularized by Michael Porter’s value chain approach in the mid-1980s. The value chain is a string of critical processes that begins with raw materials, or inputs, and ends with a product or service delivered to a happy customer. Thinking this way makes sense because it is easy to place the customer at the end of the process. But, this mindset doesn’t just affect how executives structure the organization; it weaves its way into every aspect of how the organization manages itself, and how managers make decisions.

Engineers work to design new products that will keep them one step ahead of the competition. Manufacturing produces goods to meet customer orders or demand projections. The sales department courts potential buyers so that they become actual customers. Once they do so, sales returns to identify new targets and tries to transition those. Manufacturing works to refill shelves. Engineering continues developing products.

Employees throughout the organization are focused on delivering the product or service for which they are responsible. The product attributes become the value proposition that will appeal to their customer, regardless of whether or not this is an internal or external customer. Employees are trained to think in terms of product development, delivery and value. The organization becomes, even if it doesn’t know it, product-centric. Believing that a mainstream management theory such as the value chain approach could not be wrong or outdated, management is comfortable with this view of their world. When they try to become customer-centric, they do not know how.

Departing from Tradition
These factors affect nearly every organization. Employees who have great influence within the organization will not yield it to those who have less but understand the customer better. Funding is unlikely to shift from traditionally respected areas to those areas that most affect the customer.

For a power utility, for instance, this means that engineers, who have often dedicated their entire lives to the study of their work, must be considered equal to project managers and customer service agents, many of whom do not hold any degrees. Money, resources and staffing must focus on project management and call-center technology, not just on million- or billion-dollar assets. There must be recognition that these areas equally affect the customer.

This new perspective must be executed by executives that have spent their entire careers adhering to the traditional values of the product-centric culture. But this shift is what customer-centric really means: truly understanding and meeting your customers’ needs. It starts with the customer. More specifically, it starts with a prospect.

Customer-Critical Path
This means that the traditional value chain must be rethought and renamed, more appropriately, the “customer-critical” path. A prospect travels this path on his or her journey to becoming a customer, and a customer travels this path toward the goal of becoming a happy customer. This is the true value chain of the organization – a string of processes that become critical because they directly affect your customer, regardless of the product, service, organizational chart, academic degree or bias. Find the customer-critical path and you can guide your customers through your organization in the way that is most meaningful to them and you.

But not all customer needs are the same, even within an industry that has only one real product, like the power utility example. The customer-critical path may start in several places, meeting the needs of several different types of customers – household customers that simply need power turned on or major projects that require significant project management and preplanning.

Eventually these starting paths merge. It will occur at the point at which all customers are happy. From there, they may take a different path again – some will terminate service or have new needs.
This new approach offers significant value for organizations that adopt it. It allows them to better understand their customers so that they can be segmented more effectively and targeted by products or services. A stronger value proposition increases appeal, thus driving revenue. Better service and customer interaction improve the customer experience and increase customer loyalty.

The customer-critical path also becomes a vital decision-making tool for management. It provides a clear and unbiased perspective on where resources should, and should not, be spent. It defines the relative worth of projects, assets and expenditures, painting a clear picture of what the results will be if the customer-critical path is not properly maintained.

And if your mission and vision statements say you are customer-centric, it makes your strategic plan more than simple semantics. It makes it actionable, setting your organization on a path toward true differentiation and market leadership. The customer-critical path becomes a pleasant stroll through the park for your customers, and it can also become the most profitable path for your organization.

David F. Giannetto is the director of the Enterprise Performance Management practice of Cohn Consulting Group, a division of J.H. Cohn LLP, and the co-author of The Performance Power Grid: The Proven Method to Create and Sustain Superior Organizational Performance. He can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it