Magazine Spring 2010 Research Feature

Is Your Company As Customer-Focused As You Think?

Many managers assume that their products and services will be relevant tomorrow. But employees hide problems and markets change. Unless you actually probe the organization and ask tough questions, you may be deluding yourself.

Patrick Barwise and Seán Meehan Reading Time: 19 min 

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Courtesy of Procter & Gamble

When Peter Drucker first proposed his “marketing concept” back in 1954, the notion that meeting customer needs better than your competition is the driver of business success was a radical idea.1 Today there are numerous variations on what it actually means to “serve the customer,” but most managers agree that achieving sustainable organic profit growth requires combining several elements: having a clear, relevant customer promise; reliably delivering on that promise; continuously improving it; periodically innovating beyond the familiar; and supporting all that with an organization that’s open to new ideas and market feedback.

Unfortunately, that approach is now so familiar that many managers pay little more than lip service to it. To be sure, implementing what Drucker proposed is difficult. Not only does it require putting customer needs above those of employees and managers, it forces you to face up to your mistakes and focus on what’s critical (perhaps even boring) as opposed to what’s new and exciting. What’s more, it requires a willingness on the part of senior executives to open up communication with people throughout the organization so they can hear what is actually going on as opposed to a sanitized version. Few companies choose to make this leap, even though not doing it can seriously hurt long-term business performance.

The Leading Question

How do managers ensure that their products and services are, and remain, relevant to customers?

Findings
  • Make sure everyone in the organization really understands and supports the brand promise.
  • Be suspicious of sanitized reports — seek unfiltered information on the customer experience.
  • Don’t rest on your laurels. Think about incremental innovations and also ones that go “beyond the familiar.”

The challenge for companies is to turn Drucker’s marketing concept from a “motherhood statement” into a meaningful commitment that everyone in the organization understands and takes seriously. Based on our interactions with scores of companies, management’s assumptions about the organization’s commitment to customers are often based on wishful thinking.

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About the Authors

Patrick Barwise is an emeritus professor of management and marketing at London Business School. Seán Meehan is Martin Hilti Professor of Marketing and Change Management at IMD, in Lausanne, Switzerland.

References

1. P. Drucker, “The Practice of Management” (New York: Harper & Row, 1954).

2. There is extensive literature on the role of fear and self-censorship in organizations. Studies include: J.C. Athanassiades, “The Distortion of Upward Communication in Hierarchical Organizations,” Academy of Management Journal 16 (1973): 207-226; M.J. Glauser, “Upward Information Flow in Organizations: Review and Conceptual Analysis,” Human Relations 37, no. 8 (1984): 613-643; J.E. Dutton, S.J. Ashford, R.M. O’Neill, E. Hayes and E.E. Wierba, “Reading the Wind: How Middle Managers Assess the Context for Selling Issues to Top Managers,” Strategic Management Journal 18, no. 5 (1997): 407-423; E.W. Morrison and F.J. Milliken, “Organizational Silence: A Barrier to Change and Development in a Pluralistic World,” Academy of Management Review 25, no. 4 (October 2000): 706-725; and J.R. Detert and A.C. Edmondson, “Why Employees Are Afraid to Speak,” Harvard Business Review 85 (May 2007): 23-25.

3. W. Smit and S. Meehan, “Are They Telling Nothing but the Truth? A Study of Falsehoods in Intelligence Dissemination Within Marketing Organizations” (presentation at European Marketing Academy Conference, Nantes, France, May 2009).

4. P. Barwise and S. Meehan, “So You Think You’re a Good Listener,” Harvard Business Review 86 (April 2008): 22.

5. A. Lashinsky, “Chaos by Design: The Inside Story of Disorder, Disarray and Uncertainty at Google. And Why It’s All Part of the Plan (They Hope),” Fortune Oct. 2, 2006.

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Comments (6)
mike
In a rapidly changing world of communications most marketing managers are scrambling just to keep up with the technology. This can affect all aspects of marketing - not just promotional. Having said that, it behooves us not to lose sight of the fundamental principles of marketing.
Merna Joyce
It's quite easy, always overdeliver (if you can afford it). You might lose some money at the begining, but you will see satisfied customers comming back or telling others about your serivce.

Just sending of a packadge of products with an extra candy stick as a gift will do it most of the times belive me!

Merna J
Gothenburg, Sweden
Ceremoni.se – Bröllopsdekorationer
David Smith
Bringing your customers needs to the front of the sale is always going to win loyalty. I think that Drucker was ahead of time. Mr.Drucker makes the customer feel as if they are the only customer. Bringing exclusivity of selection to a customer increases value.
David Belle-Isle
Great post for framing the outside in or customer back thinking and acting that is highly correlated with an employee engagement/partnering culture.
When employees understand the experience their product or service creates for customers, they are more likely to engage and partner with each other to drive change that will result in improvement.
Jon Innes
Great article! As a product design consultant, I'm always amazed at how little customer interaction most teams have. I'd suggest a 6th question "How many potential customers have you talked to or tested this concept with?" While your existing customers might not be able to define the next radical innovation, Apple and many others have proven that the key is refining the product or service faster than your competition. If first to market mattered, SaeHan (maker of the MPMan F10) would own the market that Apple now dominates with iPods and now iPhones.
almcfarland
Great post.  Companies think they're focused but there is a huge disconnect between the boardroom and the breakroom.  I advise clients to keep a tally of how their vendors use language during the sales process to understand how customer-focused the company is (and will be).  More here>  http://pivotpointsolutions.net/2010/01/04/remember-what-you-say-counts/