Now, how can your company overcome this myopic view? Challenge your organization to list 100 additional things that customers might want. Could you do it? I bet you could. What if they wanted the  “extras” that their very best suppliers offer (even if these suppliers are from a completely different industry). Why aren’t you working on providing those additional 100?

Most supplier-centric organizations rationalize that they know what customers need and they focus predominantly on how the products they sell meet those minimum needs. What these companies perceive to be needs, of course, fall far short of what customers want. Customer-centric organizations, on the other hand, look for new opportunities to offer to their customers, rather than waiting for them to be asked for.

Expand your organization’s field of vision. Encourage the realization that customers have many requirements that matter to them—and that they expect your organization to be aware of them.

Image credit: DraconianRain

We have heard a lot in recent years about the Chief Customer Officer (CCO). How about an Anti-Complexity Officer whose job it is to advocate for simplified processes for customers? Some of the job duties would include allowing no compromises internally when the customer is involved. This role would also help the organization develop an attitude that looks for and eliminates process complexity whenever possible.

Business success certainly depends on adding value for your customers. But it also depends on reducing “headaches” for these customers, as well. The Anti-Complexity Officer can take on the responsibility of finding and eliminating the nuisance factors and the steps in your processes that seem illogical or even boring to customers. Customers need oxygen (Esslinger, A Fine Line). The ACO’s role would be to create process simplifications that the customer will notice—all designed to let customers breathe.

The classic Harvard Business Review article “Staple Yourself to an Order” (Shapiro, Rangan, and Sviokla) challenged us to manage the 20^th century order cycle process to reduce the unnecessary problems that customers experienced at the order-level detail. The belief was that fewer problems would result in increased customer satisfaction and this was true for a while. Technology has now eliminated many of these errors.

In the 21^st century, however, the “staple-yourself” concept has taken on a new meaning. Years ago, order errors may have been reduced but the process was still supplier-centric, built for the efficiency of the seller. Customer-centric organizations are now re-designing their processes with a customer orientation. The benefits are now seen in the context of customer loyalty and the brand positioning that caring about the customer delivers.

Warren Buffett has observed, “In the short term, the market is a voting machine. In the long term it is a weighing machine.” (The Snowball). The ACO will help build internal processes that optimize the delivery of complete solutions to customers, which, in turn, will make life easier for these customers. The ACO will focus the company on “what works for the customer” rather than what is efficient internally. This optimization will inevitably favor the long-term “weight” that the market will assign to your company.

A C-Level executive must own the processes that once grew out of convenience for the company and have ended up as inconveniences for customers—or, even worse, as unnecessarily frustrating for them. Call this person the Anti-Complexity Officer. Every touch-point that is confusing will eventually lead to customer defection. Create an organization that is focused on thinking like its customers. Create an organization that your customers will understand.

Vizualization of “Management of Complexity” by Michael Heiss

What really matters is the extent to which customers value distinctive or unique outputs from their suppliers, write Joseph M. Hall and M. Eric Johnson in the HBR article, “When Should a Process Be Art, Not Science?” The “traditional scientific approach (of) imposing rules that spell out what to do in every possible circumstance” has been, it seems, adopted by many companies to apply to their customer interfaces, as well. Rote performance, however, will no longer satisfy today’s customers, who expect greater responsiveness.

Ritz-Carlton realized the need to re-orient its approach a few years ago. After decades of asking employees to follow a 20-point list of customer service basics, they shifted to “a simpler 12-point set of values that allowed employees to use their judgment and improvise,” which encouraged staff to sense customers’ needs and act accordingly. Tightly defined actions, such as “always carry a guest’s luggage” shifted to value statements such as “I am empowered to create unique, memorable, and personal experiences for out guests.” As a result, customer satisfaction improved.

Rules-driven operations, of course, are necessary for support or backroom services that function best with no variation. Here, standardization brings control and reduces process errors. This area of the business assumes that customers’ needs are completely known and the methods for taking care of them can be proceduralized. Jobs such as packing and shipping come to mind. Manufacturing a product must be repeated again and again with consistent quality or there will be problems. All companies have these types of functional activities, such as on-time shipping, invoice accuracy, and avoiding packaging defects, which can be evaluated according to internal measures. So there are clearly support roles that should be formulaic, designed to reduce variation. Level 1 transactional performance requires more science. Connecting with customers at the more advanced Levels 2 and 3 must be humanistic, designed to create fresh ideas for customers, and consequently requires a more artful approach. (To learn more about Levels 2 and 3, check out my recent white paper.)

Being customer-centered, in other words, demands a system that thrives on creativity and more personalized results. It is built off of the ability to recognize customer cues and to proactively respond to customer needs. It is an organization-wide skill that moves companies away from commoditization and into differentiation because it creates “maximum customer value” and relies on external measures of success. Hall and Johnson believe “artists need continual exposure to customer feedback” to validate the quality they are creating.

Great performance for customers, therefore, requires a mix of art and science. The science creates efficiencies in the basic processes that need to be close to error-free. The art takes performance beyond the ordinary to a higher level of customer-centricity that customers love and value. Here, success happens when organizations develop an understanding of customer needs and learn how to act with freedom and agility in order to design an outcome that customers value. Customer needs are changing more rapidly than ever before and we must acknowledge that taking care of those needs will depend on more art than science to remain extraordinary.

“Reactional” is not really a word. I created it to represent the view of an organization’s actions by asking the question, “What’s the customer’s reaction?” rather than “How did we deliver the product or the service based on our internal criteria?” When you study “what’s missing” in most customer encounters, you will find that it involves the human side of the equation. Remember, this reactional evaluation goes far beyond correcting a problem or shortfall at the transactional level. That Level 1 performance is (or should be) already satisfactory. Instead, we are looking for the upside to make plain service more remarkable.

My wife and I hiked down into the Grand Canyon recently, to a gorgeous stand of rocks which allowed us to see both East and West in the canyon. It was a view that was simply not available from above on the South Rim. They call it Ooh-ah Point, which describes it very nicely, because the view from the spot was amazing. Our work for customers should create the same feeling—Ooh-ah instead of Ho-hum. When we, as customers, are on the receiving end of great ideas from our suppliers, they captivate us and pierce our natural defenses. They are fun and we cannot resist liking the experience.

There are so many opportunities to deliver creative, upside ideas to our customers. Here’s one example. On April 8, 2010, Toms Shoes (www.toms.com) is sponsoring One Day Without Shoes (www.onedaywithoutshoes.com), in which Toms is “asking people to go the day, part of the day or even just a few minutes, barefoot, to experience a life without shoes first-hand, and to help spread awareness of the impact a simple pair of shoes can bring to a child’s life.” Toms sells shoes, of course. However, rather than selling shoes in this case, they are challenging us to step out of our own shoes in order to understand the experience of others without shoes. “It’s like taking Voice of Customer activities to the next level” writes C. Engdahl in a recent Front End of Innovation blog post. ”It’s about a new understanding coming from experiencing the feelings, thoughts, and attitudes of another.” And it reinforces Toms’ corporate mission, because for every pair they sell, they give one away to a child in need.

Successful companies excel at sensing “ho-hum” experiences that they deliver, then “filling the vacuum” for their customers. They embed this thinking into their culture. They invent services that had not existed, using “abductive” reasoning (imagining that something could be) (Neumeier, The Designful Company). Just innovation, you say? Yes, but it is inevitably more effective and goal-driven when it is focused on making the experience more engaging, more valuable to the customer.

Yesterday’s practices are becoming inadequate as knowledgeable customers bring higher and higher expectations to their relationships with suppliers. The efforts of customer-centered organizations to move to the upside for customers inspires confidence—for customers and for employees. What’s missing in supplier-centric organizations is a system to design and deliver creative ideas that will improve the experiences of customers.

Throughout 2009, I have been encouraging you to search for traits that your customers will remember you for:

• Simplify
• Inspire
• Educate
• Add value
• Get closer to your customers

Elevate the focus on those traits in your business for next year. A lot of consultants talk about hardwiring organizations, but I prefer the term ‘design’. Success will develop when you and your employees design a system that is not only functional but creative, not only efficient but adaptable, not only flexible but proactive and customer sensitive.

Consider the image that your organization presents, specifically regarding how you connect with your customers. Your “culture” will influence how your customers will view you. It’s not what your company does; it’s what your customer does that is important. And now is the best time to raise the awareness of how you can improve.

Ask this question: “How can I make life easier for my customers (current and future)?” The answers will help your organization dramatically change its services in ways that will ultimately amaze your present customers and make new customers want to come to you. Appraise every customer interface with the belief that it can be better focused on the customer. It’s a chance to reframe challenges into opportunities for you and your customers.

Chances are you are looking for more meaning in your business next year, to dust off the staleness, to be fresh. Look no further than your customers. They should represent what is most meaningful to you and your business. Then, find your true voice by making the work for your customers even more meaningful in the coming months. Get enthusiastic as your organization embarks on the road of thinking like a customer.

The transformation can only begin after you visualize what your potential can be. Take advantage of the calmness and innocence given us at this time of the year to understand that potential in terms of higher performance for your customers.  Things will get busy soon enough and your year-end appraisal will become overshadowed by business-as-usual duties if you don’t make it a priority.

Enjoy your holidays. And, be passionate about your customers.

So how can an organization move into a more creative space? In many of the workshops that I conduct, we devote time to creative customer ideas. Audience members are more ingenious than they give themselves credit for. Inevitably, a mental energy develops–a spark that motivates the audience when they come up with new ideas for their customers. The takeaway is that creativity will invigorate old ideas if you frame them around the customer.

Customer-centric winners continually experiment with the way work gets done for and by their customers. One of the best ways to develop these skills is by establishing a fixed time for teams to generate new ideas. 3M’s innovation culture is well-known. Corning’s Sullivan Park R&D lab allowed employees to spend 10% of their time on “Friday afternoon experiments” to develop “slightly crazy ideas” in experimental glass. The success of the process became clear when ”an entire genomics-technology business [was] built on an idea that was officially killed by the head of research but was pursued in Friday afternoon experiments.” (Robert I. Sutton in the Harvard Business Review http://bit.ly/5hxTbD).

Creativity is never the primary activity of your company. But it’s the activity that will make the biggest difference in your future if it’s focused on the customer. Creativity helps overcome the narrowness in corporate thinking that customers cannot tolerate. Don’t worry about the ROI at first. Invest in developing ideas that will create something better for your customers. Don’t worry about failures. Inaction is the worst kind of failure.

There are paybacks, of course, for your business. Creativity generates its power at the practical level with new products and services that will make a difference for customers. It also has value in that it leads customers to form a positive impression of your organization and thus influences the long-term customer experience. (Donald Norman in Emotional Design: Why We Love (or Hate) Everyday Things). Both internally and externally, creativity is enriching, energizing and profitable.

Discover new energy for your organization. There is no greater improvement that you can accomplish in the next twelve months than to commit to creativity that will benefit your customers. This commitment will establish creativity as a mainstream part of your culture. And in the process of creating new customer-centered ideas, you will create lots of loyal customers.

The status quo can be dangerous. The danger, of course, from a supplier’s standpoint is that you set YOUR expectations too low about what the customer wants. It is easy to think that customers simply want what you have been giving them all along. The status quo can provide consistency, but also can create inertia. Creative organizations get beyond the assumptions that block effective solutions. They have taught themselves to recognize that there are other choices, if they go looking for them.

In the book Building Design Strategy, Dave Franchino of Design Concepts writes about the dramatic re-design of baseball batting helmets by Wilson Sporting Goods that changed the market completely.

For decades, kids in Little League baseball had been subjected to the bucket helmet–an oversized, generic plastic helmet that didn’t seem to fit anyone quite right. It was too big, too clumsy, it blocked kids’ vision and slipped off their heads. It provided little or no protection, so safety was a myth.

Wilson embraced the opportunity and re-entered this market with a well-researched alternative that not only worked much better, but was considered cool by the players. It was successful because it captured the convergence of really poor design (that had gone unnoticed) and a changing culture in which families were buying more of their kids’ sports equipment. They delivered a solution that people wanted to purchase because it was flexible enough to connect with all of the needs of customers (parents, kids, and baseball coaches). Within three years, Wilson’s market share rose from 0 to 30 percent, selling approximately 750,000 helmets.

Use the batting helmet success as a metaphor for customer-centered improvements in your company. If somebody had been paying attention through years of Little League baseball, we would have had improved helmets sooner. The market wanted it, but both manufacturers and customers had fallen prey to accepting what they already had. The lesson for any organization that wants to overcome inertia in its thinking: Focus on customer actions, not the things you are producing. Understand the unexpressed needs of the people that you are serving by thinking like a customer. Like the improved batting helmet, there are better ideas that have been there all along.

As a leader, start noticing things. Systematically, identify what has not changed or evolved in the customer experience (products and processes–and question why it is still the same. Turn over some “rocks” by questioning how your organization can transform taken-for-granted features into exciters that add value. Look for evidence that you are improving. The more vigorous your desire to help the customer, the greater the potential and the result will be more meaningful.

The Staples Singers sang “I’ll Take You There” and that is what every organization should do for its customers. Traditional companies change what is not working (because it’s better for them). Customer-centric organizations change what is already working (because it is better for the customer).

Photo by wsilver

It is fantastic news that great performance, grounded in being customer-centered, is available for every business if it wants it. It grows out of deliberate practice and design of an organization-wide culture to improve on behalf of your customers.

There is another dimension of the multiplier effect that will add even more to your image of being customer-centered. Yes, practice will develop the skills for thinking like a customer. However, if we praise remarkable performance, we build on our reputation and simply get better at what we are complimenting. Because the organization understands what great behaviors look like, future actions build on earlier successes to take the business to a new level of performance. The multiplier effect translates into the motivation that sustains people through the trials of getting better and brings out their passion to make life easier for customers.

Embrace an attitude that your organization is a great performer because it is customer-centered. It can’t be lip service, however. It must be evidenced with ideas and process designs that have really benefited the customer. Once you have established the momentum, however, it will become a self-fulfilling prophecy. Geoff Colvin in Talent Is Overrated, cites Benjamin Bloom’s studies in which students who were called “fast learners” by their first teachers or coaches (whether or not they really were) were more motivated than average performers. We’ve all seen this happen in our lives. Praised performance causes more practice and the additional practice causes higher performance. Reinforcement makes everyone believe in themselves (and their organization) and the motivation just happens. The same result happens in the deliverables for your customers: praised performances will motivate even higher customer focus.

A small advantage is all that it takes at first. Tiger Woods, who started his golf training very early, received lots of positive feedback because he was not compared with more experienced players, but against his own age. I have a fantastic client, who is much better than its competition in a not-too-great industry for customer satisfaction. They have established the “gold standard” in that industry and all of their employees, rather than relaxing on this status, are using that momentum to continue to search for ways to outperform. Think also of the Pike Place Fish Market in Seattle, who set the bar for being world-class in providing customers with high value.

Success with customers, however, does not happen without careful nurturing. “Passion develops, rather than emerging suddenly and fully formed” writes Colvin. Communicate your successes throughout the organization. Hold them up as models of customer-focused behavior. Document them as best practices for others to learn from. The passion will fuel unending new ideas that will drive higher brand loyalty in your customers. Motivation occurs throughout the organization when customer-centricity becomes preeminent, rather than something that employees have to “fit in” with their other duties.

Invest in the multiplier effect to catapult your business to the next level. Customer-centricity can become a reality if you encourage independence throughout your organization and praise superior customer performance when it happens. Great performers never allow themselves to operate on autopilot. They are always making a conscious effort to improve. They understand how powerful customer excellence can be when the multiplier effect is realized.

The more you do something, the better you get at it. We are familiar with this concept in sports and music, because the more you practice, the better you become. The same thing applies in leading your organization to become more customer-centered.

In economics, a multiplier effect describes the degree of change in one variable that is caused by another variable. Geoff Colvin, however, in Talent Is Overrated, writes about a more important multiplier effect concept that was developed at Cornell University in its research into how world-class achievers become better than everybody else. The research focuses on how “a very small advantage in some field can spark a series of events that produce far larger advantages.” This advantage becomes the variable that triggers an exponential, rather than linear, improvement in skill that results in the outstanding achievement.

“World-class achievers are driven to improve, but most of them didn’t start out that way.” Success, in other words, is not from innate talent. Anders Ericsson’s study of violinists proved that those who practiced for more hours became more proficient. This isn’t difficult to grasp in everyday life, is it? Somehow we must transfer this idea to business and to techniques for continuous improvement with customers. The effect of practice is cumulative.

Colvin writes about Deliberate Practice, which can be understood by analyzing sports, music, games such as chess, and many other aspects of life. It goes far beyond hard work and must be directed at the aspects of any performance that are most important to success. Unlike casual practice (hitting golf balls without studying how to improve, for example), deliberate practice can be challenging because it requires constant feedback and mental concentration. But it works. “More of it equals better performance. Tons of it equals great performance.”

Now, transfer that concept to your business. If you are going to get better at something, shouldn’t it be related to your customers? But deliberate practice is not automatically built into most organizations’ work. It must be structured to give us immediate feedback on how to improve our abilities (not annual performance reviews). It must have a long-term, organization-wide view, not the short-term approach of following one transaction with another. It has to be goal-oriented. It must be driven by a feeling that you can always improve and that must be a core belief that is owned by everyone.

The opportunities are many but the multiplier effect requires commitment. Part II of this post will discuss how your organization can make customer-centricity take off even more quickly than expected. The journey begins, of course, by instilling in your organization the techniques for thinking like a customer. But you will not get better at it unless you practice, so believe in the critical relationship of deliberate practice to extraordinary performance. Without a systematic approach, organizations are reduced to naively counting on customer excellence happening through individual transactions, rather than the exponential outcome produced by the multiplier effect. The source of great performance is not individual deeds, but a culture that believes in and practices customer-centricity.

Jim Collins’ How The Mighty Fall: And Why Some Companies Never Give In builds off of his Good to Great and Built to Last tenets to analyze how successful companies get better, or conversely, how they decline. He describes how companies can under-perform by forgetting their “passionate adherence to management discipline” and not being “vigilant for markers of decline.” I do applaud his effort to explain why some of the star companies from his Good to Great book ultimately failed. He blames “over-reaching” by management, rather than complacency or hubris as the reason for the fall of many once-great companies. But to what degree did lack of customer focus play into their vulnerability?

Unfortunately, in How The Mighty Fall’s 182 pages of text, there are only two brief mentions of customers. Collins does not discuss the possibility of these companies failing because they “took their eye off the ball” regarding their customers. For example, I had several unpleasant customer experiences in Circuit City stores and was always astonished at how they even survived, much less made Collins’ Good-to-Great short list. Since Collins’ greatness test was essentially stock performance, it was difficult to tell what the customer-facing culture looked like in any of the companies that he wrote about.

Collins has written some of the most significant business books in the last decade because they make tantalizing cases about how average companies can become great. However, The Halo Effect author, Phil Rosenzweig describes how Collins’ book formula plays on “the dream of emerging from obscurity to fame and fortune” that has been an essential element in storytelling for centuries. Everyone has that dream, of course, but I believe there is more to business success than Collins suggests.

His books do not tell the story that the real driver of success will always be connecting with customers. The dirty little secret of business is that we continue to believe that we can be successful by focusing only on the inside-the products and services that we make.

Uncertainty in an organization’s customer direction is a recipe for poor results. Conversely, strong, pro-active customer focus is the best way to develop higher performance. In many cases, the excellence that is reflected in stock prices and higher sales emerges largely from great customer relationships, not the other way around. Business executives can become confused about cause and effect. They see customer loyalty as the effect of their great leadership, whereas the strategy should be to make customer loyalty the goal and the main ingredient that organizations must work for to ensure their success. The customer component simply doesn’t get the credit that it should as the foundation of achievement.

Every business book claims that it can crack the code of business success but most of them ignore the importance of focus on customers. Greatness cannot happen without customers. In fact, greatness is defined by customers. That is the reason to concentrate on customers’ needs first when designing your culture and your deliverables. Teach your organization to think like a customer and greatness will follow.