Monday, December 12, 2005

The Value Chain for Customer Centric Organizations

You must have read the article on Building a Customer Centric Organization Culture. Here's some thoughts on how the Value Chain propogates a customer centric organization:

To receive the full benefits of being customer centric, companies must find ways to extend it through all the levels and parts of the company. This requires adjusting priorities in nearly everything a company does. I understand that being customer centric means moving the organization’s center of gravity outside the organization, closer to the customer. Senior management from the CEO on down must set the tone and the example. Policies that require senior executives to deal regularly with ordinary customers can be particularly valuable here, such as having every senior executive deal personally with a few customer complaints every month. Having senior executives listen in on the calls that come through, the human emotions in the live call always teach us things he couldn’t have known from a dry tabulation of the facts. Tomorrow’s managers need to learn and accept the fact that once they grow to be on a senior position, they cant assume to be out of the daily proceedings in the company. A level of involvement is still required.

The new customer focus must be reflected in the metrics and incentives for each employee. New customer-centric information must be given an explicit place in the regular work process. There has to be verification that this information is being put to use in this work process, and, there has to be a clear benefit to the employees who are putting it to use. Vouch for a policy of meritocracy. If you want to instill in your employees a passion for customer results, it helps if you acknowledge them for those results.

This adjustment of metrics and incentives is especially important when a company is first making the transition to being customer-centric. In addition to the metrics and incentives that will be part of the new customer-centric organization, employees will need special metrics and incentives to ensure they make an effort to adopt the new systems. Furthermore, these temporary metrics need to be strict, and the corresponding threats and benefits need to be large. Six Sigma makes sure that these are taken care of in due course.

A genuine customer focus usually requires employees to develop new skills. If sales people are offering solutions with several components, they need different skills than they would for selling individual products. They not only need to know how the components fit together; they also need to know how to deal with the several different levels and departments in the customer’s organization that will need to approve a complex purchase. It is also a fact that some customers want an intimate long term collaboration, and some other look for just a few services. The problem is not one of choosing to have a relationship or not, its about choosing the right kind and right level of relationship.

To extend through every part of a company, the new customer focus requires an enormous amount of boundary crossing. In my opinion, the most important boundaries to be bridged are the ones that separate the methodical, technical, operations-oriented parts of the company from the creative, human, marketing-oriented parts. People who can bridge the gap between customer needs and technical procedures are especially valuable. The project manager types, are always in short supply. In a customer-centric era, companies need to be giving thought to how such people can be identified, cultivated, promoted, and rewarded.

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