Customer Focus Misses The Whole Point

by Jay Deragon on 02/10/2014

reality checkIn the 1980’s companies became obsessed with improving quality to increase customer satisfaction to keep and increase market share and profitability. Companies became obsessed with understanding the voice of the customer and everything about the customer was analyzed, dissected and correlated back to  moving the needle of profitability and market share forward.

In the 1990’s companies focused on business process re-engineering as a management strategy,focusing on the analysis and design of workflows and processes within an organization. BPR aimed to help organizations fundamentally rethink how they do their work to dramatically improve customer service, cut operational costs, and become world-class competitors. In the mid 1990s, as many as 60% of the Fortune 500 companies claimed to either have initiated re-engineering efforts, or had plans to do so.

For the first ten years of the 21st century companies awoke to an era of disruption. Adoption of the internet grew exponentially and the voice  of the marketplace shifted from the suppliers to the customers. Disruption of markets were common and the world became one big marketplace of connections, conversations and transparent intents.  These new dynamics created new languages that transformed the shape of the marketplace and business philosophies on a global scale.

The Customer is No Longer the Only Voice

The language of business frames how leaders view their relationship with the marketplace.  While it is evident that the marketplace has changed the nuances of the language of business has not changed.  Business leaders still emphasize the importance of the customer but fail to comprehend that the customer is a label that only defines a stakeholder while missing the importance of all stakeholders, people. Focusing most of your attention  on one stakeholder is a clear message that you don’t understand that the value of today’s marketplace is not merely a transactional relationship between supplier and customer rather people.

The engine of value creation any business has is the relationship it has with all its stakeholder, people. If a business focuses only on the customer, connection to the marketplace is limited, feedback is limited, there is a lack of understanding of the problems people face and less of a crowd from which to draw on to solve problems that affect everyone.

The relationship between a business and its stakeholders has changed. The customer is no longer the only important relationship in a connected marketplace with a voice of its own.  Business leaders need to shift their language and philosophy to recognize the importance of these shifts. There are three things that leaders must recognize to make the shift. These are:

  • The difference between yesterdays reality and the current realities defines the future – it is the differences that are creating a new language and new philosophies about business that are causing  major shifts in today’s marketplace.
  • Customers don’t run your business – people do. Stakeholders are people and representing all the people needed to create and consume the value your business is offering to the marketplace.  Value created for a marketplace is more than an economic transaction.
  • The reason companies exist is to help people… helping people help themselves and others solve problems or create more value takes a crowd… Your business exist to help the crowd by serving all of them, not just some of them.

As we move through the second decade of the 21st century these things will become more clear as crowds of people gain strength and influence over your marketplace with a voice louder than yours.

The customer is no longer the only important relationship. The focus ought to be on people, all of them.

 

{ 2 comments }

Maxwell Pinto February 10, 2014 at 9:49 am

Extremely informative article. Here are some thoughts for consideration:

Leaders are obligated to all stakeholders: customers, suppliers, management, owners, employees, and the local community—those that are vital to the survival and success of the corporation. We all have a moral obligation toward other human beings. Corporations that make pro?ts should be held socially responsible for contributing to the improvement of society ?nancially and in other ways, e.g. recycling of products and contributing to worthy causes regularly and frequently, rather than waiting for a disaster to occur and then contributing with a view to favourable publicity.

Immanuel Kant analyzed Friedman’s stockholder theory and Freeman’s stakeholder theory, also known as Kantian capitalism and added that when corporations follow the stockholder theory, they fail to recognize and respect the needs of those who contribute to their existence and place themselves in a position to self-destruct through negligence and sel?shness. Therefore, the stakeholder theory is superior to the stockholder theory.

Jay Deragon February 10, 2014 at 9:57 am

Very informative response Maxwell, thank you. If only leaders understood 🙂

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