book.chapter Theory - grow customer culture

A customer-centered culture is built on hiring employees who prioritize customer needs, forming the foundation for customer-focused systems and processes. This includes effective feedback mechanisms and empowering customer-facing teams. However, the essence of such a culture lies in behavior, with leaders exemplifying customer-centric actions, like using customer feedback for decision-making. It's a dynamic process involving setting goals, acting, evaluating customer impact, and adapting based on feedback, continuously aligning systems and behaviors to meet changing customer expectations, rather than achieving a static goal. Vision Every company's goal is to consistently increase the value it offers to its customers. If a company fails to add value, it is forced to compete solely on efficiency and price, which is less profitable than moving up the value curve. Customers have four basic need levels, each more valuable than the last: physical, informational, emotional, and spiritual. Successful companies gradually elevate customer relationships up the value curve to drive revenue and profit growth. This can only be achieved by engaging every employee in personal growth. As each employee develops, the organization enhances its ability to meet emerging customer needs. Therefore, a company's vision cannot remain static; it must continually evolve and expand. Comparing the customer experience aimed for today versus years ago can highlight the evolution of a company's vision. In robust companies, the vision is always changing. As stated by Michael Basch, an organizational culture should continually evolve to deliver greater value to customers over time, thereby driving increased sales and profits. The vision provides the guiding light and force - it's the experience the company seeks to create for its customers, employees, and owners. This continuous evolution and focus on value addition is what sets successful companies apart. Values Values serve as the cornerstone of an organization's culture, guiding both employees and customers by delineating acceptable and unacceptable behaviors. These principles define the operational boundaries of a company and communicate the expected responses of leaders in customer interactions, effectively transcending mere words to embody the corporate culture through actions. For example, Larson-Juhl, a leader in picture frames and accessories, anchors its culture in six core values: prioritizing the customer, ensuring fairness and honesty in dealings, respecting every individual, striving for excellence in products and services, linking financial rewards to performance, and leadership by example. Similarly, UPS emphasizes values such as cleanliness, fair compensation, and reliable service. When employees align their decisions and conduct with these values, a consistent customer experience is created across the organization, demonstrating that values are more about behavior than verbal declarations. The establishment and maintenance of these values are the responsibility of the CEO and top leadership, as they set the tone for the company's culture. Michael Basch encapsulates this concept by stating that values act as the "rules of the game," providing boundaries that, when crossed, necessitate a reassessment of actions. In essence, values are the fundamental guidelines that differentiate permissible from unacceptable actions, shaping the standards a business follows and ensuring a reliable customer experience throughout the organization. They originate from the top down, underscoring the role of leadership in cultivating a values-driven culture. Goals Effective goal-setting in an organization involves establishing objectives that are aligned with the interests of customers, employees, and owners, and are achievable within a specific timeframe. These goals should possess five key characteristics: they must align with stakeholder priorities, balance long-term and short-term considerations, be clearly communicated throughout the organization, be quantitatively measurable, and be focused, with only three to five critical goals identified. Businesses should set goals in three main areas: customer experience, employee engagement, and financial returns. Customer goals should assess both the quantity and quality of the customer base, using repeat business as a measure of satisfaction. Employee goals should gauge the workforce's passion and commitment, utilizing surveys to track engagement, turnover, and productivity. Financial goals should rely on traditional metrics such as revenue, profit, and share price. It is recommended to select one or two key goals in each area that together will foster profitable growth. Subsequently, each business unit should define four to five supporting goals that tie daily operations to the company's broader objectives. In essence, successful goal-setting mandates that goals are clear, limited in number, measurable, and reflective of the priorities of all stakeholders, with consistent communication to ensure every employee understands their role in achieving the company's vision. As FedEx founder Fred Smith put it, a manager's ability is judged by their workgroup's results, while their leadership is assessed by the feedback from those they lead. Relevance To ensure goals are met, it's crucial that those tasked with achieving them find the goals personally meaningful. When managers set objectives, they must effectively communicate their importance to staff, as relevance motivates employees. Leaders can foster this sense of relevance by aligning rewards with goals, ensuring that top performers benefit from their contributions. Public recognition of employees who advance organizational aims encourages more of the desired behavior. Sharing stories of exceptional service helps embed these values into the company culture. Additionally, tools like appreciation cards can highlight and celebrate exemplary service, reinforcing the behaviors the organization values. Relevance is determined by whether management focuses on discouraging unwanted behaviors or on making all goals—whether they pertain to customers, employees, or owners—feel pertinent to each employee. Giving people a sense of control over their future motivates them to exceed expectations. Systems should enable employees and customers to navigate their own relationships, with the understanding that customers will pay more when they perceive added value. Leaders who don't recognize this will struggle in the evolving economy, where the Internet can drastically reshape industries. Capturing and sharing stories of remarkable service is essential, as these narratives are present in every organization and can inspire others. By compiling and distributing these stories, companies can illustrate their values in action and ignite the imagination of their workforce, leading to a culture of exceptional care and service. Feedback Feedback is essential for organizations to understand if their actions align with their goals. Positive feedback reinforces behaviors when goals are met, while consistent failure to meet goals indicates a need for change. Clear, relevant organizational goals are vital for meaningful feedback; without them, feedback loses its significance. Effective feedback systems have several key attributes. They focus on critical success factors linked to customer needs, ensuring clarity about what metrics mean. They also tie factors to employee rewards, linking achievements to incentives, and favor weekly and quarterly progress reporting over monthly updates to match business rhythms and support long-term planning. Regular short meetings to review results and plan future actions, along with minimizing the time between actions and outcomes, help clarify cause and effect, boosting motivation. This approach is akin to a football game's scoreboard, providing real-time status and allowing for immediate adjustments. However, just as in football, outcomes depend on frontline employees' execution. Managers are responsible for setting up effective feedback systems and incentive programs, while employees use feedback to guide their progress and solve problems. Regular, aligned, and clear feedback helps employees gauge their performance, and incentives motivate them to achieve goals. In essence, feedback systems act as a compass for high performance, with engaged employees driving the organization forward. Action Empowering frontline employees to serve customers creatively is essential once a customer-centric culture's foundational elements are in place. Motivated employees can invent unique ways to delight customers, often beyond what managers might conceive. They leverage their deep understanding of customer needs to add value in unexpected ways. Leadership still plays a pivotal role by setting the vision, values, and policies that guide the organization towards satisfying customer, employee, and shareholder needs. Managers monitor whether goals are met and provide feedback, prompting employees to iterate and try new approaches if necessary. This cycle of goal-setting, action, and feedback fosters engagement, with employees feeling invested in customer satisfaction, leading to organizational learning and value creation. Systems must be designed to focus employee behaviors on customer needs, avoiding misalignments that prioritize personal interests over those of customers or the company. When cultural systems function well, they drive performance, with employees adapting behaviors to serve customers and generate profits. A strong culture is more effective than one-off initiatives. FedEx's opening night, where only six packages were moved, exemplifies this. The initial failure led to a company-wide focus on package delivery, establishing habits that later underpinned exceptional service and market dominance. A customer-centric culture, supported by engaged employees, is a competitive advantage, as seen in companies like Amazon and Apple, which prioritize customer satisfaction and experience. Employee engagement is crucial for a customer-centric mindset, requiring a positive culture, involvement in decision-making, training, support, and recognition. This synergy between customer and employee focus leads to sustainable business growth, innovation, and a positive organizational reputation.