In an earlier post entitled The Death—and Reinvention—of Management: Part 1, I noted that current management practices represent a set of economic, social and political problems of the first order, which cannot be resolved by a single fix, such as getting more employee buy-in, or instilling a sense of urgency, or introducing new technology platforms.
Instead, a whole host of business leaders and writers, including Umair Haque, John Hagel, John Seely Brown, Lang Davison, Rod Collins and Ranjay Gulati, are exploring a fundamental rethinking of the basic tenets of management. Among the most important changes being proposed are five basic shifts in management practice:
1. The firm’s goal (a shift from inside-out to outside-in).
2. Role of managers (a shift from controller to enabler).
3. Mode of coordination (from command and control to dynamic linking).
4. Values practiced (a shift from value to values).
5. Communications (a shift from command to conversation).
In this continuing series of posts, I will explore in more detail the models, capabilities and processes needed to accomplish these five shifts.
I begin with the first shift, i.e. the shift in the firm’s goal from one of delivering goods and services so as to generate value to shareholders to single-minded focus on delighting the client i.e. a shift from inside-out to outside-in. Subsequent posts will explore implementation of the other four shifts.
Shift #1: New goal: Delighting customers
In the 20th Century, firms got by on profits. In today’s more competitive world, profits can vanish overnight with the entry of a new product or service into the marketplace. Making profits is obviously required for survival, but if profits are all a firm has, it faces a precarious future. The true bottom line of any business—and the key to an enduring future—is whether customers are delighted. Delighting customers means continuously providing new value for customers sooner, so that they are willing to buy the firm’s goods and services not just today but also tomorrow. It’s goes beyond mere transactions; it’s about forging relationships. For this to happen, it’s not enough that customers are passively satisfied. That’s just the price of admission to the marketplace. Today, customers must be delighted.
How do you delight customers?
1. Commit: Delighting clients is not a task just for the CEO or the marketing department. Everybody and everything in the organization must be committed to providing more value to clients sooner. All work teams and units must have a clear line of sight as to what they are accomplishing in terms of delighting clients. All systems and processes in the organization must be focused on enhancing client delight.
2. Target. Identify your core market of primary clients: if you can delight this group, you will have a resilient client base. Trying to satisfy everyone practically guarantees average products and services that will not delight anyone.
3. Focus. Aim for the simplest possible thing that will delight buyers. Don't load products down with features that most people won't use and that make the product hard to operate. For instance, my DVD controller made by Sony has 54 buttons, most of which no one in our house knows how to use: it delights no one. By contrast, my iPod by Apple has just four buttons and delights everyone.
4. Read their minds. Meet buyers' unrecognized needs. "The world wasn't asking Apple to make cool-looking MP3 players or arrange an easy, cheap way to download music online. People didn't know they wanted iPods or easy music download services until Apple invented them." says Chip Conley, author of Peak (Jossey-Bass, 2009) Apple did some mind reading with respect to what their customers (or potential customers) would love, but didn't know could be available. And Apple keeps surprising us. For example: the iPad.
5. Innovate in stages: Launch the product or service with the key features that primary clients want, and then add selectively through upgrades. Apple’s iPhone initially lacked many features of existing Smartphones, but it delighted its core group of customers—young users who wanted a cool mobile phone; the other features were added later.
6. Evaluate: Don’t just add features. Following every customer suggestion can lead to a client-driven death spiral. As more and more customer requests are met and features are added, the product can become unlovable or even unusable. Make sure that each upgrade really does delight.
7. Customize: Harley-Davidson isn’t merely building reliable motorcycles. It aims to fulfill the dreams of its customers through the motorcycle experience. If that means going beyond the signature full-throated roar of their Harley and enabling the Harley owners to embellish their vehicles with grassroots folk art, the company will help them do it.
8. Partner with customers: Companies can enhance delight by partnering with buyers. For example, Quadrant Homes, a division of Weyerhaeuser doesn’t build homes and then try to sell them, Quadrant sells homes before building them and involves buyers in each step of the design. The customer can choose from multiple footprints and floor plans. The result is high demand in a weak market and strong word-of-mouth advertising.
9. Empower: To please customers, make sure frontline workers have the power to make decisions on the spot. Issues are resolved faster. Everyone in the organization must be inspired to thinking all day and every day: what can I do give more value to the customer sooner?
10. Measure: You can’t manage anything unless you can measure it and customer delight is no exception. Fortunately, Fred Reichheld has shown how, with the Net Promoter Score discussed in The Ultimate Question (HBSP, 2006). In most situations, asking a single question—how likely is it that you would recommend this product or service to a colleague or friend?—gives an accurate reading on whether the customer is being delighted.
The shifts are interdependent
Individually, none of the five shifts is new. However what has been learned in recent years is that when one of these shifts is pursued on its own, without the others, it tends to be unsustainable because it runs into conflicts with the attitudes and practices of traditional management.
When the five shifts are undertaken simultaneously, the result is sustainable change that is radically more productive for the organization, more congenial to innovation, and more satisfying both for those doing the work and those for whom the work is done.
To learn more about delighting clients
For those who would like to learn more about delighting clients, read Roger Martin's HBR article, The Age of Customer Capitalism, and my series:
- The Reinvention of Management: Part 1: Overview
- Reinvention of Management Part 2: Delighting the client
- The Reinvention of Management: Part 2: Delighting the client
- The Reinvention of Management: Part 3: From controller to enabler
- The Reinvention of Management: Part 4: From bureaucracy to dynamic linking
- The Reinvention of Management: Part 5: From value to values
- The Reinvention of Management: Part 6: From command to conversation
And read books such as The Power of Pull by John Hagel, John Seely Brown and Lang Davison, or Reorganize for Resilience by Ranjay Gulati, or The New Capitalist Manifesto by Umair Haque, or Leadership in a Wiki World by Rod Collins, or my own book, The Leader's Guide to Radical Management: Reinventing the Workplace for the 21st Century.
 Kotter, Buy-In: Saving Your Good Idea from Getting Shot Down (Boston MA: Harvard Business Press, 2010).
 Kotter, J. A Sense of Urgency (Boston MA: Harvard Business Press, 2010)
 McAfee, A. Enterprise 2.0, New Collaborative Tools for Your Organization's Toughest Challenges (Boston MA: Harvard Business Press, 2009). The emergence of social media has accelerated horizontal communications both between employees and between customers, underlined the lack of agility of traditional management and helped expose inauthentic organizational behavior. However, the introduction of social media by itself will not resolve the complex set of problems that traditional management currently faces. By itself, technology will reinforce existing behaviors, unless the goals, roles, values and practices also change.