For more than twenty years the mantra in private
enterprise and public enterprise has been "customer focus". The phrase
appears on mission statements, vision statement and "our values"
statements adorning private and public enterprise walls alike.
The
phrase has been embedded in part by an exponential growth in management
processes and systems based processes. The advent of systems based
methods such as Enterprise Resource Planning and Customer Relationship
Management have hard coded customer needs into organisations.
Quality
methods such as Six Sigma and Total Quality Management have often been
used to focus attention on delivering upon customer's needs. The full
list of methods which in one way or another beseech the user to have a
customer focus would easily fill up this entire column.
There is, however, a simple problem.
Most
organisations have difficulty in defining who their customer is.
Additionally, they have great difficulty in defining what it means,
specifically, for their organisation to focus on the yet to be defined
customer.
The implications of the problem remaining unresolved
are significant. Organisations that are truly focused on customers will
build their operations around the customer. To build operations around
a customer has implications for the organisational leadership,
performance management and processes management/technology enablement.
Organisational
leadership includes strategic goals, organisational design, roles and
responsibilities, supporting management processes such as corporate
governance and risk management and identification and management of
stakeholders.
Performance management includes resource allocation
and alignment, target behaviours, performance measurement, performance
appraisal and reward, training and development and physical asset
management.
Process management/technology enablement includes
process design, process KPIs, process accountability and
responsibility, common data, common applications and the consistent use
of the internet.
Getting it wrong on who is the customer and
building an operation around it makes it expensive to get right when
the real customer becomes apparent.
For instance, government
departments may think that their customer is the Minister. If that is
believed to be true, then the whole organisation of the public service
would be geared to providing services to individual Ministers.
If,
on the other hand government departments believe that their customers
are a segment of the general public, then all their services would be
geared to providing those segments with their needs at an acceptable
cost on behalf of the Minister.
A simple way of understanding who
customers are, is to ask the question "Who should (or does) feel the
pain if our organisation/department stops work altogether"? For
instance, Intel had a choice of determining that the PC manufacturer
was their customer. They chose the end user as their definition of the
customer.
In developing their business model, Intel made sure
that if any pain was going to be felt if they were to go out of
business, it was going to be the end user. PC manufacturers can come
and go, but Intel was to serve the needs of the end user. It also
communicates this with its "Intel Inside" campaign.
If an
organisation understands who its customer is then it needs to
understand what "Focus" means. Invariably, "Focus" means solving a
customer's problem. But there is the rub. What is the customer's
problem?
Many organisations satisfy themselves with convincing
the customer of the organisation's product features. Some go as far as
selling their product benefits. Very few take the time and effort to
understand customer needs and virtually nil concentrate on solving the
customer's problem.
A customer's problem may generate several
needs, but the problem remains singular. A well published example is
the story of the new CEO who took over an old, struggling company that
manufactured drill bits.
The vice president of marketing, wanting
to impress the new CEO, brought elaborate colour charts of the "bit
market" to the first board meeting. The vice president detailed the
total market for bits, the company's current market share and the
potential for increasing the "bit market".
When the presentation
ended, all eyes turned to the new CEO. His comment changed the mindset
of the company: "Sorry, there is no market for bits ... the market is
for holes." From that day forward, the employees of the company looked
for better "ways to drill holes" not how to manufacture better drill
bits.
Determining a customer's problem requires organisations to
refine the operation they have built around their identified customer.
The refinements are so that they may gather data about customer's
problems and segment customers by their problems.
This has
implications for data definitions, segment definitions, data collection
and manipulation, product development and service offerings and
customer measurement. The implications filter through to staffing
levels, recruitment, staff development and training, finally all the
way through to organisational design.
"Customer Focus" is not for
the trivial placement in mission and vision statements. It is a
strategy with wide ranging impact requiring true focus on the
organisation.
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