thinking like a customer

thinking like a customer

Customer-Centric Management is Non-Traditional

By on April 29, 2009

Much has been written about the successful partnership model epitomized by Procter & Gamble and Wal-Mart in a landmark collaboration started 20 years ago. However, in addition to the Information Technology and supply chain synergies that developed, the even greater lesson to be learned is that being customer-centric involves changing your organization chart in terms of how you interact with your customers.

The P&G and Wal-Mart story is well known. It has been documented in Rising Tide : Lessons from 165 Years of Brand Building at Procter & Gamble and a recent white paper by Michael Graen of P&G and Michael J. Shaw from the University of Illinois. The changeover transformed a fragmented, even adversarial, process into an integrated system that drove down costs and automated business practices, while building sales by focusing on selling what customers wanted. What we might not recognize is that it was founded on an organizational structure that shared data so that both entities could better understand their customers. Information sharing is the reason for becoming customer-centered. Information sharing is the secret for success of becoming customer-centered.

This reshaping can best be understood by a model described in the diagram shown. In the traditional Bow-Tie design, each company approached the other through a single point of contact, with Sales at P&G "owning" all customer activities and working with Purchasing at Wal-Mart, who "owned" his company decisions. Both of these counterparts were backed by a pyramid of functional support, but everything was filtered through the point of contact.

In the new relationship, everything was reversed, forming a Reverse Bow-Tie or diamond shape. When the functional specialists in each organization began meeting with their counterparts, information and process improvements began to flow. The result was a game-changing breakthrough that benefited both companies, as well as the consumer.

Tom Peters in a recent issue (vol. 6, no. 1) of the Corporate Design Foundation magazine spoke about Mistake No. 1 that managers make in understanding and using design. It is "treating design as a veneer issue rather than a soul issue." He explains that corporate executives are too literalist in their interpretations of the deliverables to their customers. "We're trained as engineers. We have MBAs. Because we still believe that business is a reductionist activity, rather than a holistic activity."

The relationship with our customers is much more complex than that. The goal of becoming customer-centered is to meet the demands of a quickly changing market. The fulfillment of the Reverse Bow-Tie structure means that the customer is more loyal and that your operation is more efficient. The real secret, however, is that your suddenly have real-time information about your customers' needs which don't become filtered and misconstrued through bureaucratic convolutions.

This dynamic information source becomes a knowledge base and expertise that newcomers to the market cannot match and your customers recognize that. It allows your organization to resolve problems and to experiment with new ideas without weeks of studying and multiple layers of approval. It creates what Peters calls a "bias for action" and an energized workforce that can use its creativity to design customized solutions for its customers.

Expecting your existing organization to become customer-centered because of a few cosmetic changes is unrealistic. Being customer-centered is non-traditional and this carries over to designing your organization, as well. The "veneer" approach will not work. The world that your customers experience is changing so rapidly that your company's success depends on the constant gathering of information. If focusing on your customers is central to your enterprise strategy, then you must design your organization to reflect that goal. The shared information will be powerful.

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