Know When to Listen to Your Customers...and When Not To

Balancing customer needs and business interests is critical, and "voice of the customer" exercises can be artificial. An iterative approach is necessary. This excerpt from "The Six Sigma Leader" offers some tips.

By Peter Pande, President, Pivotal Resources

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Every company I’ve worked with over the past 20 years has had a policy or vision statement of some kind that claims, in essence: “We are committed to meeting or exceeding customer expectations 100 percent of the time.”

But there’s a point at which commitment to customers must be balanced with the interests of the business. [1] As if “satisfaction” and “profitability” weren’t hard enough to balance, there’s the added difficulty of staying abreast of changing customers, markets and opportunities. This is where “focus on the customer” can – and does – get companies into trouble. By concentrating on satisfying today’s customers, selling them the products and services they want now, you can fail to pay attention to finding opportunities to serve tomorrow’s customers (who may be an entirely different group from those you have now).

The key skills of Six Sigma Leaders are put to their ultimate test in this challenge of balancing customer needs and their organizations’ self-interest today while being ready to change with the customer, or to begin serving new customers. This article will examine ways to build a more solid and practical approach to increasing customer focus balanced by the need for flexibility and long-term success. Although much of what’s here relates to “external” customers or stakeholders, these same concepts can be applied easily to “internal” groups.

Systematic approach to understanding customers.

Back in the very early days of what’s now called Six Sigma, managers at Motorola put together a simple way to measure process performance based on counting “defects.” Counting defects is by no means the only good way to evaluate your business; however, Motorola’s choice led to a subtle but important awakening for a lot of companies.

Trying to count defects in a business led to some key questions: What is a defect? Who decides? Where do you look for them? There could be a lot of arguments over what a defect really is. An engineer, trained to build electronic components a certain way, might have one definition; a manager might have a different interpretation; and so on. Multiply that by every individual engineer, manager or employee and soon you have hundreds or thousands of so-called defects – or at least that many dueling opinions on what is or is not a defect.

As a result, Motorola decided to consult a “higher authority”: Rather than arguing over it, they defined a “defect” as any failure to meet the requirement of an external customer. [2] How is this a breakthrough? Because trying to understand and quantify “defect” this way exposed a weakness shared by many, if not all, businesses.

Much of the understanding about what’s important to external customers did not come from those customers themselves, but from internal groups defining or deciding what customers want.

As the measure was applied and as more scrutiny was placed on identifying “defects,” many instances arose where it became clear that the “customer focus” companies were claiming to practice was not quite as effective as they’d believed. It turned out there were a lot more defects, as defined by customers, than there should have been. [3]

Figuring out what customers want is not an easy thing to do, but Six Sigma leaders first have to understand and address the factors that undermine customer focus.

Size and Silos

The nature of the modern corporation is like an extremely dense object. As the business grows, there’s more and more “mass” on the inside while the surface area – the part that has contact with the outside world – grows more slowly. Customer information that does filter through doesn’t lead to any action because an employee fails to understand its significance or, worse, it gets ignored because of the most damaging excuse in business: “That’s not my job.”

When people do engage with customers, the nature of that contact is usually limited by their function or role. This is true even in small organizations; roles like accounting, logistics, sales, and so forth get specialized even when you have only five or 10 people in a firm. The challenge for a larger business, however, is that those role-focused people are less likely to understand the “big picture” of that customer’s experience or relationship.

Most of what people care about, and in fact are asked to care about by their management, are things internal to their business. This is really the “bridge” between the size and silos challenge and the lack of empathy (Box). The silos create the internal focus, and internal focus leads to cluelessness about what customers really consider important.

Think of how senior executives usually describe their company’s goals. Here are a few common phrases:

  • Grow revenue by 15% per year over the next three years.
  • Capture 30% market share.
  • Enter five hot global emerging markets.
  • Launch two new products per quarter.
  • Boost gross margins by 3% in the coming year.
  • Make one major and one minor acquisition each year.

Rarely in these pronouncements is the emphasis on the customer’s experience. Leaders get into the habit of defining success in terms of the company’s goals, when those are really outcomes of what is done for customers. [This internal focus can be exacerbated by] mergers or reorganizations. It takes active, consistent leadership to sustain an outward-looking organization.

The Customer Is Always . . .

How would you fill in that blank? Most people favor: “right,” perhaps the most traditional formula on the planet [4], but a better option would be “important.” One of the more challenging issues for a business is to determine how to say “no” to a customer, in an appropriate way and at the right time [5].

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