The Meaningful Outside
(This article is the second article in a strategy series titled What Only The CEO Can Do. Read the first article here.)
Every company and organization has a lot of external stakeholders, each with different demands. The key is to define your most important external constituency, and to ensure that everyone acts in alignment on that understanding, choice, priority and focus.
A lot of companies and organizations say they are customer-centric, intent on serving their customers… but which customers specifically? And, how specifically will they change their behaviors, practices and processes to really treat their customer as the boss?
It takes careful analysis and clear thinking to sort through customer behavior, possibilities and potential, and to decide which specific customers are prime prospects and the focus of your business. And, it takes focused attention and concentrated effort to change behaviors and processes so that you act on understanding the needs of and serving the interests of your best current and potential customers.
Competing demands from other external constituents — distributors and retailers, suppliers, partners, investors and share owners— all take energy, effort and time away from your focus on the customer.
At the end of the day, the purpose of every business is to create a customer, and to serve that customer better than any alternative competitor. The only way to generate sales is to sell your product and/or service to a customer. Without revenue, there are no profits, there is no operating cash flow.
In my 50 years of business experience, I have learned there are only two ways to get in touch with customers. The first (and best) is to get off your duff, get out of the office and go spend quality time with your customers. Try to understand their needs and wants. The other option is to bring customers into your business on a daily and weekly basis.
We did both at Procter & Gamble. As CEO, my first stop in every market or country was an in-home visit with target customers. My second stop was in-store with customers, or as e-commerce developed, online with customers. Then, and only then, would I sit down with the business leadership and teams to work through business problems and opportunities.
All other external stakeholders benefit from your deep and current understanding of customers, and your capability and competitive advantage serving them better.
I am often asked why I don’t put employees ahead of customers. Employees are assets or, more precisely, resources. Employees are incredibly important. They generate Innovation and execution. The quality, service and value they deliver to customers can be decisive. Your best employees can generate more revenue and more profit.
But, too many employee-focused companies end up being internally focused, rather than externally focused. They lose track of changing customer needs and wants over time, and fall into the unfortunate trap of having to choose whether to prioritize and give value to customers or employees. This trade off has befallen industry after industry.