Customer-Centered Key Concepts
Think of the troubles we would have if managers and employees of our enterprise had different answers to the question, “What is 2 plus 3?” We take it for granted that everyone would give exactly the same answer: 5. To achieve this phenomenal consensus, we have all had extensive education and drill on basic math over many years. Sadly, we do not have this same level of agreement on the meaning of basic terms critical to organizational success.
Ask any dozen people in the organization who they think “our customers” refers to. If your organization is like most, you will get about a dozen different answers. If you don’t think this ambiguity matters, read no further. Your transformation efforts are doomed to failure. Not only does this matter, it is often a principal obstacle to all purposeful endeavors. But most folks can’t see it, like the iceberg below the surface.
No significant organizational improvement or transformation can be sustained without a broadly shared language. There are several objectives for identifying and describing a few key concepts here:
- Impose a discipline on our language that is equal in precision to a simple mathematical formula.
- Remove the confusion inherent in basic terms we assume everyone understands.(e.g., service, customers, outcome).
- Demonstrate how you can test for common understanding.
- Accelerate your C3 transformation process.
Ambiguity, along with Vital Lies and complexity, are three major barriers to transforming culture and achieving excellence. Ambiguity is a common cause of organizational chaos, confusion, conflict and constraint. The sources of ambiguity also point us to the main levers essential for transformation:
Please see Chapter 6, Mastering Excellence, for an extensive treatment of this subject.
Benchmarking can help break the convergent thinking paradigm by identifying others who are already doing things we may think are impossible: it can defeat vital lies. A strong virtue of benchmarking is that it can lead to very rapid improvement. This can be essential for success (if not survival) in a fast changing environment.
Benchmarking can be done on (1) processes, (2) products, (3) producer outcomes and (4) customer outcomes. If your organization practices benchmarking, which of the four get attention?
Whose definition of quality is being measured: producer’s, customer’s or both?
Benchmarking, once completed, guarantees neither continual improvement nor innovation.
A limitation in conventional benchmarking practice is its primary focus of internal process, secondarily on today’s product(s) and lastly (if at all) on customer-desired outcomes. Benchmarking can, at best, uncover how to be equal to the best. Customer-centered continuous innovation can enable the practitioners to become the best and sustain their leadership position.
A broker is the customer who acts as an agent for the end–user and/or the producer.
As an agent for the end–user, the broker makes the product more accessible, easier to use and more appealing.
As an agent for the producer, the broker “encourages” the user to accept the product.
The broker’s function is to obtain, transform or transfer products for the benefit of both users and producers.
Effective change strategies enable these questions to be answered by design, rather than through default or trial and error. Click here to see questions.
Effective change strategies enable these questions to be answered by design, rather than through default or trial and error.
- What are the right problems to work on first?
- Will fixing these problems advance our leadership position?
- What is the criteria for determining
- What are the improvement objectives?
- How much improvement is enough?
- Who are the right people to be on the team?
- If teams are “self-directed”, where do customers fit?
- Are we trying to satisfy the right customers?
- Who needs what training; when should they get it; how much will they use?
- How will the visibility of results increase the change initiative’s momentum?
- What measures, incentives and rewards will support the initiative’s goals and sustain the change process?
Predictors of Change Initiative Success
- Purpose of the initiative is clearly understood and agreed to by those affected.
- Concepts, language and methods are personally relevant to and used routinely by top management.
- Initiative is integrated into the organization’s business plan and system of performance measures.
- Strategic priorities, measures and incentives are aligned with and support the initiative.
- Successes have observable impact on improving customer satisfaction and the organization’s competitive position.
- Activity is not treated as an end in itself.
- Tools used challenge assumptions of what is possible and effectively change values and behavior
As the number of statements which are true increases, the likelihood of sustainable success increases.
The objective of C3 is to enable you to determine who your customers are, what they want and how to proactively satisfy them.
Satisfaction with individual and organizational performance is determined by our customers on the basis of three kinds of expectations:
- Performance expectations (objective, directly measurable criteria) about an organization, activity or product
- Perception expectations (subjective, indirectly measurable criteria) about an organization, activity or product
- Outcome expectations about the ultimate results the customer wants to achieve by working with an organization or using a product or service
Which of these criteria is your organization most likely to measure? Most organizations measure performance expectations best.
Which are most valued by customers? The C3 assessment process will provide the answers.
Which one should be improved first to best enhance your organization’s competitive position?
Customer Centered Thinking
The customer-centered organization begins the transformation process by understanding the outcomes expected by customers with uniquely distinct roles. The organization measures and translates those outcomes into product design characteristics that are wanted by each type of customer. The process for creating those products is then redesigned to enable short cycle time, reduced cost, high variety and low error. This is called the “growing a business” approach.
- Products focus our vision outward to customers. A product is something created by work which can be given to someone else. Organize quality and customer satisfaction initiatives around products and their intended outcomes.
- Customers (end-users, brokers, fixers) can only be identified by their relationship to specific products.
- End-users always win in the long run. Unfortunately, we often spend too much time attending exclusively to the needs of “brokers”, to the temporary disadvantage of end-users.
- Performance, perception and outcome are the basis for satisfaction. Customers have expectations about both the attributes of a product (performance and perception) and the outcomes to be achieved by using the product.
- Always assume customer wants are unmet. Our tendency is to assume we know what they want. When this happens, we are likely to give customers what we think they should expect. What customers expect is not necessarily what they want. Assuming we don’t know prompts us to ask.
- What we measure is what we value. Measurement is management’s way of saying “we care.” Customer priorities such as ease-of-use, timeliness and certainty often go unmeasured.
- Without knowing what we do (produce knowledge products), who we do it for (end-users), what they want and why (outcomes), how we do it (process) is irrelevant. Organizations typically emphasize process improvements without first adequately assessing whether they are producing products which meet customers’ outcome expectations.
- Eliminate and consolidate before we automate. These are three tactics for improving process and product flow within a process. Avoid the rush to automate before considering the first two possibilities.
- Process improvement, not positively experienced by customers, is a competitive mirage.
- Vital lies are constraints on any change initiative. Vital lies are the justifications (often unfounded or inappropriate) we offer in support of current practices.
We are not suggesting that there are only 10 important principles, but these are some of the most critical. While these individual principles may deserve merit by themselves, real progress toward improved customer satisfaction cannot be made unless the principles are pulled together in an integrated approach. The Customer-Centered Culture® model provides that integration.
This customer will personally use the product to achieve a desired outcome.
Customer expectations are considered the basis for determining what “quality” means. Simply put, quality is the degree to which customers get what they want. Quality is product-focused.
Customers have expectations about both the attributes of the product and the outcomes to be achieved by using the product. These expectations are stated in the “voice of the customer” which may not be directly measurable. They have to be translated by the producer into precise design criteria which are directly measurable. Producers sometimes refer to these translations as requirements, specifications or standards. These terms are not as inclusive as expectations.
Producers in a customer-centered culture proactively solicit emerging customer expectations and wants to direct both continuous improvement in quality and achieve breakthroughs in innovation. Producers in a producer-centered culture assume product specifications totally reflect customer expectations.
CAUTION: What a customer expects can be different than what is wanted. Customers may expect a dental visit to be unpleasant. They don’t want it to be. We should aim to understand and deliver what customers want, not necessarily what they expect.
A fixer is any customer who will have to make repairs, corrections, modifications, or adjustments to the product at any point in its life cycle for the benefit of the end-user.
Quality initiatives have traditionally focused on product and process improvement, influenced by industry (producer) standards, current practices and existing technology. Improvements tend to be made incrementally, using convergent thinking. The traditional questions encouraging improvement in quality include: (1) How many defects or “things gone wrong” can we count? (2) Does this product meet measurable specifications? (3) Are we in compliance? And (4) How can we apply continuous improvement to our process or product?
- Lean is a set of tools. C3 is an integrated system.
- Lean’s primary focus is Dimension 8 (D8), the producer’s process. C3 contends that, when addressing process, leadership needs to differentiate and put special emphasis on D4 first, the customer’s process for acquiring and using the product. In practice, this means that any time spent by a customer trying to understand and use a product (whether a website, a TV remote control, a bottle of prescription pills, or a bottle of laundry detergent) is waste. You will find very few Lean practitioners thinking about Lean that way, let alone measuring customer time spent opening a package. On the other hand, Apple, Amazon and Uber have achieved great differentiation by addressing customer time. None have referred to their efforts as Lean. They call it, as does C3, ease of use.
- Lean assumes in practice that lowest cost is best. Whose cost, one may ask? Why, the producer’s. Is it possible to produce a low cost product that causes the user high cost to own? You bet. Not with C3, which considers total cost, with special emphasis on the customer’s expense. Such total customer expense is rarely tracked by Lean practitioners, or anyone not a C3 practitioner, for that matter. An example of how this matters might be seen with Tesla Model 3 and Toyota’s Prius. Both vehicles were introduced at a premium price. That price is the purchased price, the figure put on all new car windows. How about the total cost to own? Both vehicles have a much reduced total cost to own, with the Tesla purposefully designed to enable remote over-the-air repair without any customer-experienced downtime or added cost.
- Lean relies on a reactive mindset. That is, it advocates the search for problems, delays, unnecessary production expenses and so forth. Not bad things to eliminate. But how about designing these things out to begin with? That is not Lean’s strong suit. It is for C3, which puts heavy emphasis on innovative design intended to maximize customer-desired outcomes.
- Lean’s bias in on production, especially of manufactured products. C3’s bias is on consumption of all products, both tangible and intangible. Since over 87% of us do not personally make widgets, C3 is applicable to everybody. C3 is especially suited for the knowledge age.
Measures of Satisfaction
Measurement is management’s way of saying “we care.” The values of the culture are reflected in both what is measured and how those measures influence organizational behavior, penalties and rewards.
The producer-centered culture measures the “cost to produce.” The customer-centered culture also measures the “cost to own” and the “cost to use” experienced by customers.
Organize measures by product. When one variable changes, it will become easier to see its impact on other measures of the same product. Consider which type of measure (nominal, ordinal, variation, relationship) is most appropriate for each variable.
A principle of measurement: the usefulness of a perception measure improves when explained by a performance measure.
Mission describes the organization’s purpose. Which of these four outcomes are the focus of your mission?
1. Outcomes desired by customers (especially end-users).
2. Outcomes customers want to avoid.
3. Outcomes desired by the producer organization.
4. Outcomes the producer wants to avoid.
A principle of measurement: the usefulness of a perception measure improves when explained by a performance measure.
Outcome is the result achieved by use of the product. “Outcomes desired” refers to the purpose for the product. Outcome focus is the driver for innovation. Outcome is the ultimate purpose the customer wants to achieve.
Producers and providers of products are often concerned with process and activity; customers care most about outcomes or results they experience by using products.
Producer Centered Thinking
The producer-centered organization focuses its improvement energies on processes. It assumes that effort will result in products with wonderful capabilities for customers. Customers are often undifferentiated, giving brokers the most power.
BENEFITS OF DEFINING WORK AS PRODUCTS:
1. Reduces ambiguity in defining “what we do”
2. Creates a tangible link between process and outcome
3. Provides the basis for identifying who our customers really are
4. Shifts focus from “how” to “what”, keeping “why” in mind
5. Enables the measurement of the seemingly immeasurable (in terms of unit cost, quality, value, volume, timeliness, satisfaction, etc.)
6. Simplifies prioritization of work
7. Gives activity purpose
8. Improves accountability
9. Uncovers new sources of differentiation
Source products include strategies, plans, and policies. They are produced by management. Source products are the directing influence on major corporate processes. They define the purpose or intent of the process. Most source products are created exclusively for internal use.