August - 2009 - issue > In My Opinion
R Chandrasekaran
Saturday, August 1, 2009
It’s always been appropriate for businesses worldwide to wax eloquent about the value of customer-centrism. For instance, Mahatma Gandhi’s note on the value of the customer is pervasive in corporate literature. Likewise, it is extremely ‘in’ to quote management gurus on the value of the customer and the power of the customer-centric model.

Amid all the sound and fury on what would otherwise seem obvious, there is a bunch of deeper dynamics that demands the highest realization of ‘customer-centrism’. ‘Deliberate design’ often decides the level of customer-centrism and the quality of the business value harvested from the model.

'Deliberate design’ can be defined as the conscious weaving-in of customer-centric attributes into the core of the organization’s DNA, strategy, and processes; an environment that builds an ecosystem with the customer at the core.

While alternative opportunistic strategies have yielded results for many, it is appropriate to reckon them as providential. A customer-centric strategy of ‘deliberate design’ has been consistently observed to be more robust and sustainable — extremely viable for both the long as well as the short term. The emergence of contemporary customer-centric thinking on ideas such as the extended enterprise, customer-analytics, customer-centric innovation, and customer-built product and service portfolios are increasingly auguring a very different perspective on how businesses operate, respond, or innovate in a customer-centric milieu.

Customer-centrism as a ‘deliberate design’ operates on three essential support elements:
1. Customer-centric strategy
2. Customer-centric operations
3. Customer-centric innovation

Customer-centric Strategy
Fundamental to every strategy definition is the orientation. Customer-centrism as an end-goal starts with customer-orientation as the first requisite. This is built through a deliberate process of the ‘what’s in it for the customer’ put at every step of the way. Be it expanding to a new location, or rolling out a value-add, or even doing something internally with the employees knowing the old mantra of ‘happy employees make happy customers’.

A customer-centric strategy helps not only in increasing new product ideas, but also, at a more fundamental level, in rendering newer perspectives to old things — much like what Starbucks did. Knowing early on that its customers would appreciate a bit more than coffee, Starbucks built its model around an experience. With absolutely no advertising for over 30 years, Starbucks with no trace of a beverage in its name has become synonymous with coffeeing.

The story of Amazon and Jeff Bezos, as articulated in an interview in the Harvard Business Review a few years ago, captures the idea with ease. When asked, “What are some of the things you’re counting on not to change,” he responded “for our business, most of them turn out to be customer insights. Look at what’s important to the customers in our consumer-facing business. They want selection, low prices, and fast delivery. This can be different from business to business. There are companies serving other customers who wouldn’t put price, for example, in that set. But having found out what those things are for our customers, I can’t imagine that ten years from now they are going to say, ‘I love Amazon, but if only they could deliver my products a little more slowly.’ And they’re not going to, ten years from now, say, ‘I really love Amazon, but I wish their prices were a little higher.’ So we know that when we put energy into defect reduction, which reduces our cost structure and thereby allows lower prices, that will be paying us dividends ten years from now. If we keep putting energy into that flywheel, ten years from now it’ll be spinning faster and faster.” Simple, but true.

Customer-centric Operations
Modern CRM and customer analytics tools have created an environment where every process in the business is attuned to the demands of the customer. However, there also are several resident process improvement practices that significantly impact the operations, when defined with a customer-centric methodology.

A simple yet fantastic illustration of customer-centric operations is UPS with its ‘340 methods’ for drivers, which spell out, for example, how to carry one’s keys to avoid unnecessary fumbling and how many steps per second constitute the desired ‘brisk pace’. All for just one goal – to ensure that every customer receives the UPS package on-time and safe. UPS today positions itself beyond the package delivery business, seeing itself as an enabler of global commerce.

Customer-centric Innovation
Secluded in the confines of technology intensive businesses, the innovation agenda has appropriately taken the center stage in today’s everyday business. Companies are increasingly getting intuitive to the needs of the customers and driving the agenda on ‘what customers want’.

A decade-old research at 3M identified this exceptionally well at a higher order science than what we could possibly imagine. It breathed a new lease of life into 3M that felt it was getting trapped in a loop of product improvements and extensions, than differentiating innovation. Research revealed that many commercially important innovations were initially thought of and even prototyped by users rather than manufacturers. ‘Lead users’, as they were called, were companies, organizations, or individuals who were well ahead of market trends with needs far beyond those of the average user.

Those discoveries transformed the difficult job of creating breakthroughs from scratch into a systematic task of identifying lead users — companies or people that have already developed elements of commercially attractive breakthroughs — and learning from them.

While the teams were conventionally designed to gather information from users at the center of the target market, analyze and deduce assumptions of what might be perceived as new ideas, the role of the user in this case was to provide information on the desirables, and the in-house developers used that information to create new product ideas. The lead user process, on the contrary, took a fundamentally different approach, by collecting information about both needs and solutions from the leading edges of a company’s target market, and from markets that face similar problems in a more extreme form. Development teams assume that savvy users outside the company have already generated innovations, humbly accepting that their job was to track down especially promising lead users and adapt their ideas to the business’ needs and in the process generate breakthrough products.

The lead user method was utilized in 3M’s Medical-Surgical Division to develop a breakthrough surgical drape product where the team of lead users included a veterinary surgeon, a makeup artist, doctors from developing countries, and military medics.

The concept of ‘customers as innovators’ is also gaining traction. Be it software product companies like Google, which takes its applications from the alpha to the beta stages only after trying them out with its select user community much before mass-marketing them, or engineering technology intensive companies like GE, which enables customers with Web-based tools towards building better plastic products, or even Pepsico, whose Frito-Lay customers can invent a flavor for a potato chip, all have customer-centric innovation at the core of the total innovation agenda.

In sum, what truly matter are the ‘4 As’ of customer-centrism: Aptitude, Attitude, Attributes, and Altitude. Operating on a domino effect in a customer-centric paradigm where one customer-centric characteristic triggers off the other, these four elements can form the bedrock of an organization where customer-centrism is strictly a product of ‘deliberate design’.

While the worlds of politics and economics have debated on the many ‘isms’, in the world of successful business just one ‘ism’ remains absolute — ‘customer-centrism’. As they say, it is deceptively simple, yet meticulously comprehensive.

The author of the article is R Chandrasekaran, President & Managing Director, Global Delivery, Cognizant.

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