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10 November 2012

Who owns the Customer?

Tag(s): Business, Leadership & Management, People

I recently attended a Forum on Customer Relationships hosted by IBM and organised by Criticaleye of which I am an Associate. This led to a stimulating debate on what some believe will be one of the issues that dictate success or failure for many Enterprises in the next decade.

Bill Payne, Vice President of CRM and Industries in Global Process Services (GPS) in IBM, certainly thinks so. His current role encompasses the development of business strategy and service development for GPS CRM and Industry Vertical Services Globally. This portfolio covers all core CRM customer experience and industry vertical services which IBM delivers from over 50 centres globally with over 60,000 staff. He took this role in March 2009 having previously been Vice President of Strategy and Development in Europe.

Bill argues that technology is changing everything. This is particularly driven by the explosion of ownership of mobile phones and tablets and the corresponding explosion of data. In India 300 million people own a mobile phone but may not have access to sanitation. In such emerging markets the technology leap is more a long jump than a triple jump as they make one change from where they are to where they need to be. An example of this is the creation of digital money in countries like Kenya.

With this background there is an overwhelming need to have clarity of who owns the customer. Bill quotes the example of the battle between Airbus and Boeing. Airbus stole a march on Boeing by talking to suppliers of consumer electronics like Sony and Panasonic. They had redefined their customer as the ultimate passenger rather than the airline who bought the plane. They wanted to know what the infotainment needs of the passenger would be in the future and so make sure the aeroplane was designed to meet those needs with enough capacity to stream the audio and video data that future passengers would demand.

Another example Bill gives is the Circle Hospital in Hinchingbrooke in Cambridgeshire. The first privatised hospital, its management has transformed it by making it genuinely patient-centric. Even the catering has been upgraded with cordon bleu chefs while serious threats like MRSA have been eliminated as they are in existing private hospitals by a proper regime of preventive cleanliness. Bill thinks it can only get more complex, that the process has to be managed from outside to in rather than inside to out and so believes that every company should appoint a Chief Customer Officer who would take Board responsibility for managing this process, working closely with the CEO but relieving him of this particular workload.  (See my blog Too Many Chiefs 20 November, 2010 Tag: Management)

David Wild, former CEO of Halfords, naturally, perhaps, disagrees. For him it must start with the CEO who must ensure the whole organisation is customer focused and uses the example of Sir Terry Leahy. (See my blog Management in 10 words 21st July 2012 Tag: Management) But customers are fickle and competitors are trying to take them off you. Boards have to review customer metrics and Remuneration Committees must reward for this as well as financial metrics to ensure it is embedded in the culture.

As retailers wrestle with multi-channel complexity they need to focus on managing digital channels in partnership with the other traditional channels. For David the change to digital is analogous to the change in the cinema business from silent movies to talking pictures. In that sense the change to digital has not yet taken place. Halfords needed to think through what their legacy stores offered versus pure play such as fitting or the sale of accessories. David appointed a Digital Director and he drove participation from just 2% to 10%.

Peter Horrocks is the Director of BBC Global News and the World Service. He told us that the BBC now researches online and collects Twitter feeds etc. It now needs to join all this up. The new Director General, George Entwistle, who had just taken over at the time of this Forum, has announced to staff that he will reorganise around subjects not channels. This is no doubt wise as customers can effectively set up their own TV or radio station with internet protocols, world wide access to internet radio and YouTube etc. George Entwistle's position, however, now looks questionable after the Savile and McAlpine scandals.

Dipak Jain is the Dean of INSEAD, the leading Business School. He thinks businesses need to anticipate rather than try to forecast, i.e. they should plot different scenarios. They also need to learn how to deal with ambiguity as things will become ever more complex. They also need to enhance their adaptability to different cultures. Marketing has to embrace the total customer experience. In first class accommodation in a plane the question is “What would you like for lunch?” Increasingly the reply might be "What’s the choice?” to which the answer is “Yes or No!” Dipak reminded us that customers don’t know what they want.

Meanwhile B2B is moving to B2C or more accurately, B2P, Business-to-Person. We’ve come a long way from when Microsoft would respond to complaints with the riposte “Our products are OK, you need to get your IQ checked!”

The ensuing debate was vigorous with no firm conclusions. But I am suspicious of this idea that we need to appoint yet another Chief to manage the programme or rely on the CEO to take full responsibility. Neither of these guys will actually spend much of their time dealing with real customers, at least in a consumer facing business. A new book helps explain why this is happening. In “Outside In”, Harley Manning and Kerry Bodine of Forrester Research observe that customers are growing more powerful. The internet makes it easier to shop around and share complaints with a wide audience. Yet poor service persists.[i] With various examples drawn from the aeroplane industry I reminded the Forum of an earlier example some thirty years ago. Jan Carlzon, then CEO of SAS, told me how he  turned his organisation chart upside down and empowered his frontline staff to deal properly with the concerns of disaffected customers. The process was transformational and SAS achieved new highs in customer service.

At the time when Jan Carlzon took over at the helm of SAS the company was facing large financial difficulties and losing $17 million per annum and had a reputation for poor punctuality. It was highly centralised and decisions were often hard to obtain to the detriment of customers, staff and ultimately shareholders. Carlzon revolutionised the airline industry through an unrelenting focus on customer service quality.  Within a year of taking over SAS had become the most punctual airline in Europe and had started an on-going training programme called Putting People First. This was focused on delegating responsibility away from management and allowing customer-facing staff to make decisions to resolve any issues on the spot. Jan Carlzon said at the time: “Problems are solved on the spot, as soon as they arise. No front-line employee has to wait for a supervisor’s permission.” Sceptics who thought such behaviours would simply add to costs were proved wrong as the changes fed directly into the bottom-line and the company made a profit of $54 million in 1982.

This lesson is just as relevant today. Writing this on the day of the appointment of a new Archbishop of Canterbury one of his older bishops talking on Thought for the Day, a feature I usually see as a signal that it’s time to get to work, held my attention with a story of a Yorkshire vicar who on his own initiative had handed out £10 notes at his recent Harvest Festival with the instruction to use them positively with neighbours in need. And his congregation had. Instead of standing themselves another couple of drinks in the pub they went out of their way to give something of meaning to a neighbour less well off than themselves. The best example was one who took an old boy to fulfil his boyhood dream of seeing his beloved Middlesbrough football team play live.

I’m trying to do something similar with a local school. The head is excellent; all the stuff about Vision and Values, and Mission Statements has been done. But what is still needed is that sense of empowerment that allows each teacher to feel they can do what is necessary to ensure outstanding provision of teaching and learning to every pupil.

[i]Schumpeter, The magic of good service The Economist September 22nd 2012

 Copyright David C Pearson 2012 All rights reserved

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