The following was first published on the Harvard Business Review.
Improving customer value continuously is difficult in almost any organization. That’s true partly because so many organizations are still organized around functional silos, which are managed to optimize their own performance rather than to deliver value to customers.
If internal feuds don’t sabotage things, Process Attention Deficit Disorder will. An astonishing number of executives think of service improvements as the slow, boring route to competitive advantage.
Then there’s a third killer of continuous improvement: the performance management system. A single-minded focus on next quarter’s numbers is sure to crowd out costly, ongoing investments in process improvement.
Leading organizations use some powerful long-term techniques to get around these problems. I categorize these as tools of the heart, head, ears, and feet.
Inspire people to improve customer value — Heart. Organizations whose people share a clear sense of who they are and the impact they are trying to have on the world can overcome internal barriers to improving customer value.
For example, hospitals attract employees who care about people, want to provide better patient care, and are proud of their professionalism. They aren’t motivated by cost reduction, and they aren’t likely to embrace cost-saving approaches. But they will enthusiastically adopt approaches that eliminate waste and improve patient experiences.
Focus on achieving a distinctive customer value proposition — Head. Not all organizations take the same approach to creating customer value, nor should they. Having a clear strategy helps an organization focus its efforts. One strategy is to eliminate inefficiencies and waste so that you’re providing consistent, reliable, low-cost services. Another is to tailor your offerings for each individual customer, based on deep knowledge of her unique needs. A third is to offer cutting-edge, technically innovative products and services.
I once helped the Dana-Farber Cancer Institute define its customer value proposition; one of the organization’s objectives turned out to be world-class service delivery. This understanding, in turn, led to a concentrated focus on improving the process for scheduling patient appointments.
Build online communities with customers to drive product and service improvements — Ears. Online customer communities (interactive websites where customers collaborate with the organization and one another) are a relatively new phenomenon. According to my friends Vanessa DiMauro of Leader Networks and Bob Buday of The Bloom Group, these communities can help organizations tap into customer trends and thereby develop better products and services.
In September 2009 the Palladium Group, founders of the Balanced Scorecard, launched “XPC — The Execution Premium Community” for senior strategy professionals worldwide. It now has 2,700 company members who can access Palladium’s resources around the clock, share knowledge and experiences, and join in discussions with Palladium Group strategy consultants. The community has helped the Palladium Group understand which topics customers need help with, to gather ideas about what new offerings might look like, and to test those offerings before marketing them broadly.
Take a personal interest in improving processes to meet customer expectations — Feet.Employees learn what managers value by watching what they spend time on. If they see you listening for and solving customer problems, they’ll follow suit.
In my post What the C-Suite Needs to Do for Process Improvement I described how Jeff Bezos and other Amazon.com executives spend time listening to customers’ problems and visiting distribution centers. Mickey Drexler, CEO of J. Crew (and CEO of The Gap during its go-go years), is famous for anonymously visiting his stores to observe and talk with shoppers and staff. He personally answers shoppers’ emails and telephone calls and makes at least five store visits per week.
Continuously improving processes to deliver more customer value often conflicts with optimizing departmental performance or delivering aggressive short-term returns. But there are powerful techniques that can leverage an organization’s heart, head, ears, or feet to better connect it to customers. Different companies will find different approaches work better for them, and smart ones will use a combination.
What systemic approaches to improving customer value have you seen organizations build? Did they play to employees’ hearts, heads, ears, and feet? Have you seen an organization manage more than one approach at a time?