The Importance of Determining What Customers Value? – A Cultural Context

Introduction Organizations need to make a paradigm shift in order to compete in the global business arena. The battlefield has changed and has become crowded with many different troops trying to outbid and outlast each other. The crowded battlefield does not stop new troops to parachute-in and making the field more messier. How do you…

Introduction

Organizations need to make a paradigm shift in order to compete in the global business arena. The battlefield has changed and has become crowded with many different troops trying to outbid and outlast each other. The crowded battlefield does not stop new troops to parachute-in and making the field more messier. How do you get out of this mess as a winner?

In-order to survive in the new market place, organizations need to develop a number of key competencies to adopt to the external environment. While developing this key competencies to face the external threat, the organization need to align the internal structures, systems and processes: – an effort where many of organizations start to struggle and eventually going out of business. It is a pity that these organizations go out of business without really knowing or understanding what caused their business failure.

This write-up intends to throw some light into the issues and help organizations to get into the right footing.

Key Principle: DETERMINING AND UNDERSTANDING CUSTOMER VALUE

This is one of the key principles that is required by an organization in order to survive in the current and future business world. This is easier said then done. Very often leaders, believe they know everything about the customer and what the customer wants. This in fact might not be very true for the organization. Even if they know, very often they fail to transfer the knowledge and execute relevant action plans to support the principles.

The failure would most likely due to failure to align the organization to support the principle. This could be lack of understanding of organizational culture

A Simple Understanding of Organizational Culture

An organizational culture can be divided into three levels (Edgar H. Schein).

Level 1 which is an outward view of culture related to behavior. This is also called as artifacts. Artifacts include physical arrangement in the organization, language used, communication styles, slogans, traditions and etc. This level of culture is easily observable by anyone.

Level 2 is an inward view of culture. This relates to values ​​and beliefs in the organization. This is not easily observable.

Level 3 is also an inward view of culture. This is the deepest level of culture. At this level organic members make assumptions of certain basic actions in the company that is accepted as unquestionable truth about how things work. At this level most of the actions will be derived from a sub-conscious mind. In most cases values ​​and beliefs that have been well grounded will be turned into an assumption.

Behavioral Alignment

What behavior do you need to establish to support this principle?

a. Having a structured discussion internally and externally to understand what the customers want and need.

This will require spending a great deal of time by going into the customers organization to understand how business is done, the key business drivers of the customers, customer product differentiation. One of the key behavior expected here is the involvement of key holders in understanding the customers. This is called the cross functiona l approach. The marketing, manufacturing, R & D and the procurement team at minimum should be involved together with the sales team. Here, the message here is this is not the job of only sales to know the customers.

b. Product / Service Development With Customer in Mind

Understanding the customer need must be translated into product development cycle. Teams must come together to ensure the products developed are in-line with the customer need and provide value to the customer. The discussion session can be intense as each member ensures customer interest is taken care.

c. Develop Listening Skill of Front Line Executives and Managers.

Well this seem to be very obvious and simple thing to do. But how many organizations really get this simple thing to be a DNA of the organization.This simple and yet powerful skill is a must for the people to display especially when they meet the customers. It is listening to the customers, what they say, how they say it will give a clue what the customer has in his mind.

The same listening skill can be useful to be used internally. Sometimes, we have situations where people at the shop-floor have many things to say but because they are not one one will listen to them. Well the assumption is not unfounded.

We need to develop skill of managers who will be able to sense if something is not right with a customer and they will approach the customer to listen to their concerns.

Values ​​and Belief Alignment

a. Belief in Flexibility in Approach.

The organization need to create a culture of being flexible and risk taking to meet the market need. Feedback coming back from market may require change in the products and services being offered. Here, the organization will need to be flexible to enable making the changes required. Certain level of risk taking is also required. This belief contradicts with many senior managers who have set their mind that they have the best formula to solve the customer's problem.

b. Cross Functional Approach

Understanding customer value is not only the job of the sales, rather the job of everyone who are directly and indirectly involved in the design and delivery of products and services. A cross functional approach brings the entire team together to work out solutions in the interest of the ultimate customer. The same approach should be extended internally. Any initiatives undertaken, it is best to get it done through cross functional groups.

c. Recognition

Teams or team members who are able to bring to the table what customers would be recognized. Here is a recognition system that supports teams or individuals who spends time with customers to understand their needs must be put in place. This will further spur the teams to improve their understanding of the customer.

Assumptions Alignment

There could be many assumptions that might go around the organization that contrast with the direction the organization is taking. In order to support the customer value principle, these requirements must be identified and addressed by the organization. The assumptions might be valid or maybe pure assumptions.

a.The Management Do Not Listen to us

Who knows better the customers then the people who are directly dealing with them. The front line people who deals directly with customer will have ton's of information from the customer. The same can be said about the shop floor people who have indirect dealing with the customer.How do we get this information channeled correctly? There must be a process established that will ensure that all information can be done without fear. And information given will be acted on, where it is possible. A feedback must also be in process to ensure to communicate the status of information given The worst action can be done is not to listen to people. The people make assumption that the organization does not listen to them and will never listen. Here, with this assumption, no information will be given to the right person.

b. Every one is equal in this game.

As the organization encourage cross functional activities, the right message this sends is that every department is equally important in this endeavor. In the past, usually the front line people are rewarded better compared to the supporting department. Here, people will form an assumption that only front line people with get royal treatment. This will lead to under performance and uncooperative attitude among team members. This assumption, if it exist must be addressed quickly.

c. Department Key Performance Indicators is more important then others.

In the past, organizations reward people based on departmental KPI. Here, the teams are more likely to be focused on internal performance that supports the KPI. This will lead to silo mentality. To address this, departments need to have common KPI that supports the customer value.

d. Selling on Price

The past practice of selling on price, would have been very well grounded in the minds of sales personal and many senior managers. Throwing and matching price may be the name of the game. Because of this practice many sales people will assume that selling on price is the right strategy. A strong compelling argument need to be developed and communicated to al sales personal because selling on price is not the right strategy in the long run. It will take a while to get the conversion to selling on value to implemented. For fast buy-in, the SE's must be included in the value selling process much earlier. For those Sales who are not able to convert into value selling, this might not be the right organization.

Conclusion

In ensuing the principle of understanding customer value is effectively implemented, the organization need to consider all aspect of the culture and create a seamless alignment between the three levels. Failing to do this, will lead to doom for the organization