Applying the customer lens to organization design

Recently Strategy+Business published the 10 Principles of Organization Design. Overall some excellent information here. I'd like to add my 2 cents based on what I know about customer-centric organizations, and how this outside-in perspective can better ensure success. 

In point #1, Declare Amnesty for the Past, S+B highlights the importance of reconnecting with your sense of purpose, what will differentiate, and what capabilities will help you deliver on your value proposition.... 

Why your transformation effort is likely to fail

Why your transformation effort is likely to fail

There’s a lot being written about digital transformation. Customer experience transformation. Future of Work transformation. Oh, and let’s not forget innovation. No matter the type, they all seem to be failing. McKinsey reported that "just 26 percent of respondents say the transformations they’re most familiar with have been very or completely successful at both improving performance and equipping the organization to sustain improvements over time" in 2015; two years later, they found that "companies are no more successful at overhauling their performance and organizational health than they were ten years ago."

I'll share my theory, formed after countless conversations with senior leaders over the years and numerous customer-journey/root cause analysis projects....

The Value Platform Archetypes

In the last post, we discussed the purpose of a value platform: to serve as the customer-centric beating heart of an organization’s strategy, informing everything it does in order to bust silos, boost efficiencies, and (most importantly) drive revenue and growth. 

Grounding the Value Platform are the Value Platform Archetypes™, which have emerged over nearly 30 years of customer-insight-driven strategy work. What I noticed after a few years of conducting bottoms-up strategy projects is that we always surfaced variations on the same themes. The first emerged from a brand strategy project for a B2B technology company back in the early 90’s. After numerous 1:1 interviews with technology decision-makers, we noticed three primary needs that drove decision-making:

How to bust silos, improve efficiencies and drive revenue

In the last post, we discussed the six ways in which value propositions can be ineffective: they can be product- or company-centric, fragmented, unfocused, not applied to the ecosystem, be unsustainable, and/or not aligned with internal culture.

Today we’ll focus on what’s needed: a “north star” destination and framework used by the entire organization that addresses all six common stumbling blocks:

    The hallmarks of ineffective value propositions (with examples)

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    Value propositions are a fundamental part of business strategy. When done well, they communicate a meaningful promise to a specific customer type and provide guidance to various departments across the organization. 

    However, value propositions often fail to realize their potential for six reasons. These reasons appear more often in complex organizations with multiple products and/or customer types, but they can surface in any business.

    1.   Product- or company-centric instead of customer centric value propositions.

    Without clear customer segmentation, the only way to craft a value proposition is to talk about yourself – which is typically less relevant and motivating than a customer benefit. This error is especially endemic to companies who serve many different types of customers and have trouble finding the common denominator. Additionally, product-centric value propositions are often not terribly inspiring, and we need inspiration now more than ever. Purpose, meaning, inspiration, emotion… these are all strongly linked to customer and employee loyalty.  

    Let's look at Opera's value proposition; what a snoozer. Uninspiring and undifferentiated with zero customer benefits. Wait! You might say. Aren’t “fast, secure, and easy to use” all customer benefits? No. They’re not. They are features of the product, and the company leaves it up to the viewer to infer what benefit that has to them.  Perhaps this is why Opera is one of the least-used browsers.

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    Secure, easy to use, simple... these are all tablestakes. Customers expect them. If your product or service isn't secure, simple and easy to use, you might as well go home. Now, if you focus on the related outcome or benefit to the customer (feeling in control or empowered), you can run with that.

    By comparison, LinkedIn’s promise of “connect(ing) the world’s professionals to make them more productive and successful” is clearly anchored on the value to the customer: productivity and success. It’s aspirational and motivating to not only customers, but employees as well.  

    2.   Value propositions that don’t factor in the exponentially changing environment.

    Technology is evolving rapidly. New competitors are disrupting markets. Customer expectations are rising. Successful value propositions must be anchored on what doesn’tchange in order to carve out and own a unique territory for your brand over time, and not subject your stakeholders to whiplash.

    This is fundamentally about frame of reference -- how do you define your business? Are you a railroad company, or a transportation company? The former will become obsolete; the latter will not. A Google search of “we are the leading…” produced a billion hits, many of them “we are the leading (xyz kind of company):" an undifferentiated promise that constrains your business. This error is highly related to #1 as it’s company-focused rather than customer- or outcome-focused, but important enough to call out separately.

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    3.   Fragmented value propositions due to internal silos.

    In a more complex organization, product teams often develop their own value proposition… which is rationalized because each product (and therefore the feature/benefit set) is different. However, when multiple products are sold to the same customer (more often than not) it creates inefficiencies internally and confusion externally.

    Let’s look at how fragmented (and unfocused, #4) Cisco’s value propositions are. Each product-centric business unit produces their own value proposition, despite the fact that many of Cisco’s customers buy across the portfolio. There’s no connective tissue other than some overlap with simplicity and security, but as mentioned earlier, these are tablestake features, not differentiated benefits. 


    4.   Value propositions that aren’t laser-focused.

    A value proposition needs to align against one very clear customer benefit or outcome. This is critical at the corporate level, since every department, product, business unit and experience must deliver on that promise. Multiple customer outcomes mean multiple targets to hit. What is the real goal to deliver on as a company, not a business unit? Looking at Cisco’s fragmented and unfocused value propositions, are teams supposed to deliver on improving productivity, helping customers feel more secure, or more in control? Or perhaps make progress together?

    Believe it or not, it is possible to anchor the promises of multiple business units on a single promise if they sell to the same customer. For fun, let's think of an example: Cisco could leverage one of John Chamber's sayings, "We help you see around corners," tapping into every customer's and partner's need for feeling confident today and in the future. Each product/BU's specific value propositions could be anchored by this type of corporate-level promise to knit together a coherent story for customers, employees, and partners.

    What should you do if your company serves very different customer profiles (ie. personas)? Start thinking in terms of brand portfolios and stop trying to be all things to all people.

    5.   Value propositions that are not applied to the entire value ecosystem.

    Again, for complex businesses, the value proposition must be delivered throughout the ecosystem, which includes partner organizations. If, for example, your value proposition includes a values-based component sustainability or CSR, then it must be supported by your entire value chain. Or if you sell a product through resellers, those resellers must support and ideally embody what you stand for.

    Nike is well known for orchestrating its entire ecosystem to deliver on 'inspiration and innovation for athletes.' Or, continuing the Cisco example, the "helping you see around corners" value proposition could be applied to partner selection and training regardless of product. 

    6.   Value propositions that don’t mirror the internal culture.

    If you’re promising to make customers feel valued, for example, but you don’t embody a culture of recognition, your promise won’t be authentic. What is promised externally must be lived and breathed internally. Our increasingly transparent culture will reveal the lack of alignment.

    Think of Wells Fargo's promise: “Earning lifelong relationships, one customer at a time, is fundamental to achieving our vision.” Thanks to a top-down pressure from higher-level management to open as many accounts as possible through cross-selling, the company was fined $185 million and still faces criminal and civil suits. According to Wikipedia: “Wells Fargo employees described intense pressure, with expectations of sales as high as 20 products a day.[48] Others described frequent crying, levels of stress that led to vomiting, and severe panic attacks.[49][50] At least one employee consumed hand sanitizer to cope with the pressure.[51] Some indicated that calls to the company's ethics hotline were met with either no reaction[52] or resulted in the termination of the employee making the call.[53]

    This is clearly not a culture that promotes earning lifelong customer relationships.

    In the next post, we’ll cover a solution to these challenges: The Value Platform.


    How to Navigate Change

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    Humanity has been around for roughly 200,000 years. If our history were a 2-hour movie, it would be an excruciatingly boring one for the first 1 hour, 59 minutes and 59 seconds. But for the lone moviegoer who makes it this far, the last second rewards them with a blast of change and innovation that – when seen in context of the big picture – is the singularity in action.

    Change is exponential, not linear. And we’ve surpassed the tipping point.

    If we think the past few years have been quite the ride, this tidal wave of change will only accelerate. The next 10 years will make the past 10 years feel charming and quaint. Evolution of AI and augmented intelligence, virtual reality, robots, driverless cars, automated and networked everything with real-time data and intelligence… we’re just scratching the surface.

    How is a business to keep pace?

    The pace of change is one that’s widely recognized and yet most companies don’t have a good answer for how to manage it. Fact is, the antiquated model we inherited from Henry Ford is already falling behind and cannot be sustained much longer. Why?

    • It’s optimized for efficiency rather than adaptability. And sadly, the silos inherent to this model are creating enormous inefficiencies because…
    • It’s optimized for products rather than people and ecosystems. This worked well for a linear automobile line, but it fails miserably to deliver coherent, valuable experiences that customers want to buy. And it neglects to address the ecosystem complexity (partners, stakeholders, value chain, etc.) that is emblematic of modern business.
    • It’s optimized for incremental thinking versus true innovation. “Operating like a machine” used to be a complement; in some circles, it still is. But a well-oiled machine does one thing well; if you want it to do something new, you have to rebuild it. Few, if any, machines can think laterally, or from the customers’ perspectives, to arrive at fresh new ideas that address unmet needs. At least not consistently and repeatably.
    • Lastly, this model defines “value” in a one-dimensional way: financial. In the dry mumblings of a dusty bookkeeper, value is determined by the market rather than by those who pay our paychecks: our customers.

    Why most transformation efforts will fail

    As we all intuitively know, we can’t solve problems with the same thinking that created the problems in the first place. The number one roadblock for forward progress that I’ve seen over my career is fragmentation and silos… and yet transformation efforts are often fragmented and run out of a single department.

    ·      Digital transformation run out of IT

    ·      Innovation transformation run out of product teams

    ·      Future of Work transformation run out of HR or real estate

    ·      Customer-centric transformation run out of CX or customer service

    Many companies are trying to do all these things at once without connecting the dots. And sadly, the vast majority of consulting and analyst firms mirror their clients’ dysfunction, since that’s how the buying process works.  Everyone is far too focused on specific trees without understanding the broader landscape.

    So we have culture change for innovation, culture change for digital adoption, and culture change for customer-centricity. We have Future of Work efforts that address the physical workspace without addressing the culture and processes and org structure needed to support these spaces. All sitting on top of an outdated business philosophy that puts products ahead of people.

    And then we wonder why these efforts fail.

    The solution: Focus on what doesn’t change

    As we think over the past thousand, or tens of thousands of years, what hasn’t fundamentally changed? The answer is in the mirror: Humanity.

    We’ve had the same basic needs for security, control, belonging and significance for eons. We want to learn and grow, and contribute to something bigger than ourselves.  

    A lot has been written about how Millennials and Gen Z are so different from the older generations, but I disagree. We all share the same fundamental human needs… but the younger generations’ expectations are unique. We Gen-Xers and Boomers were taught to work within this rapidly antiquated system. Millennials are rightly challenging that system.

    When steel was invented, bridge builders didn’t keep building steel versions of wooden bridges; they understood that the new materials enabled a new kind of bridge, one that is lighter and stronger. Digital Natives understand the same thing: that technology is enabling a completely new species of business. One this is more human, not less – understanding that bridges are there to help humans get from point A to point B, not to be an end unto itself – and embodies different principles than Henry Ford’s legacy that enable the betterment of our society.

    What does this mean for you?

    Every successful brand has anchored its entire business around meeting a customer-defined need. I’ve outlined the Value Platform archetypes in the next post, but a few examples:

    ·      Apple focuses on control (ease of use/simplicity) and aesthetics.

    ·      Starbucks focuses on empowerment and belonging.

    ·      Nordstrom focuses on esteem: helping customers feel valued.

    ·      Social media giants focus on connection and belonging.

    ·      IBM focuses on security (“no one ever got fired for buying IBM”)

    Think about it: innovation starts with understanding customer needs. Digital and Future of Work is in service of customer and employee needs. Customer-centricity (obviously) is about meeting customer needs. So why are all these different departments doing their own research (or worse, not doing research at all) without clear alignment at the top on what definition of value the organization is trying to deliver?

    When you anchor everything you do on meeting one (or more) unchanging need states that is common to your various stakeholders, you create a human-centric platform that breaks down silos, unifies transformation efforts, and establishes an unchanging frame of reference (ie. transportation vs. railroads) that can take you into the future regardless of how your context changes. In other words, it serves to defrag business.

    Is this the whole answer? Not at all. But if your business is on a journey to be relevant in the future, alignment around an unchanging North Star destination is an essential first step.   

    On launching Farther

    After nearly 3 decades in service of business at consulting and analyst firms, I've seen the benefits and drawbacks of each. I've grown tired of producing endless PowerPoint decks that end up on a shelf. And I've talked to countless organizations, all of whom share the same roadblocks thanks to our inheritance from Henry Ford. The mechanistic, linear, siloed mode of business just doesn't work -- for customers, employees, or leaders -- and it's not going to last. 

    Farther was started to address these problems. It's a journey, not a PowerPoint deck. We guide and empower, we don't do it for you. We work with cross-functional teams, not silos, because that's the only way change will happen. And we take a human approach to business, because at the end of the day, human customers are paying the bills, and human employees are doing the work. All the buzzwords like digital and innovation are in service to humanity, not the holy grail in themselves. 

    If this approach sounds intriguing, let's start a conversation.