Outside in, not Inside out: The Key to Becoming Customer-Centric.

Dr. Samir Asaf and James Creelman

Stakeholder Engagement through Outside-In

A study by Bain & Co. showed that whereas 80% of CEOs believe their organizations are customer-centric, only 8% of their customers agree.

Herein lies a dangerous “managerial blindspot” that has often proven fatal to organizations. The top management teams tend to be over-confident that their mindset and strategic approach are customer-centric, without recognizing that their organization is not configured to deliver customer-centricity: and not even close! The result: dissatisfied and disengaged customers.

The underlying problem is that organizations, and in particular their leadership teams, take an “inside-out” view of performance and resource allocation (i.e, starts with the internal organization) rather than one that is “outside-in” ( i.e., starts with the customer).

Changing the Question

The starting point for an outside-in approach is the question, “how do we deliver value to the customer and how do we continually capture and respond to the changes in their expectations and solution offerings?” This goes to the very heart of strategic planning and execution. 

Such a customer-value approach to management flies in the face of a conventional, inside-out finance-based planning, which has as its starting point financial targets and the spreadsheet: Many refer to this as “the tyranny of the spreadsheet” where the starting question tends to be, “how much money do we have and where do we best allocate resources to deliver those numbers?” Despite hollow platitudes the customer rarely comes into the equation.

Sadly, many organizations are slavishly devoted to this inward-focused mindset. The customer perspective is often relegated the next best seat because of other operational and strategic priorities. In addition, since most customers, according to research, don’t bother to complain or communicate their frustrations or expectations, an information-gap is created which results in an over-estimation in customer satisfaction scores.

…many organizations are slavishly devoted to this inward-focused mindset.

Compounding the Problem

As well as the described tyranny, much of conventional management practices compound the problem. Management teams are rewarded primarily on earnings growth, while the quality of customer experience does not show up on the balance sheet or income statement, at least not in the short term.

Making matters worse, this inward-focused mindset steers the prioritization of performance measurement, whereby the lagging financial metrics take precedence, rather than the leading customer, process, and learning goals and measures. Consequently customer-centricity goals at best suffer or more likely become totally unattainable, and competitive advantage erodes due to lack of customer focus during strategy development and execution. This is not helped by the fact that the perfect Customer Experience metric is hard to find, as Net Promoter (NPS) and Customer Satisfaction (CSAT) scores fail to provide actionable business intelligence, and thus serve as “somewhat useful” indicators for improvement initiatives.

Where are all the Chief Customer Experience Officers?

That organizations are still mainly inwardly-focused is strongly suggested by the fact that despite the almost deafening organizational screams that, “we put the customer first” few organizations have a ‘Chief Customer Experience Officer’. This is partly because it is a tough role to fill. Customer experience management is not a vertical function, it is horizontal, with broad cross-cutting roles and so anathematic to the conventional, and now increasingly dysfunctional, silo-based approach to structuring organizations: Frederick W. Taylor has much to answer for!

…despite the almost deafening organizational screams that, “we put the customer first” few organizations have a ‘Chief Customer Experience Officer’.

Optimizing the customer experience requires great pre-sales, point-of-sale, and post-sales lifecycle management. It requires excellence in sales and marketing, credit management, quality management, process and operational excellence, sales and operational planning, customer lifecycle management, employee training and development, service design, data-analytics, and technology platforms.

With his/her enterprise-wide remit the CEO is probably best suited to lead the delivery of such an experience, but alas wears far too many hats. Therefore, customer engagement is relegated, by default, to the customer service department and its Chief, who is neither trained, equipped nor has the authority to ensure all CXOs work collectively rather than functionally.

Delivering a Competitive Advantage

With customer experience management recognized as the next frontier in organisational success, companies that do get it right enjoy a competitive advantage in the marketplace. Such organizations centre their business strategies and execution plans around their customers.

As examples, highly customer-centric firms such as FedEx, Disney, and McDonald’s focus on “Glocal” (Global/Local) strategies that are agile and flexible based on the needs of the local markets they serve. Key customer segments are engaged, and competitive advantage is continually renewed as these organizations deliver on their customer-centric strategies, processes, and values. The “customer culture” permeates across the enterprise, both vertically and horizontally and with seamless coordination across functional silos – and, crucially, from strategy to execution.

A Multi-Stakeholder Perspective

So, how can we begin to transition from an inside-out to an outside-in mindset; one that ensures that the internal organization is aligned with the needs of its customers, and indeed other external stakeholders? 

A good starting point is to implement a multi-stakeholder perspective, which plays a critical role in balancing the outside-in and inside-out perspectives. A new breed of big-data and analytics technologies, such as Performax360, are being deployed to enable and facilitate continuous customer engagement; thus enhancing competitive advantage for firms that figure out how to do it right. 

All of this is accelerated through the online engagement of customer focus groups in an ongoing and iterative partnership, where they have the incentive to give their valuable opinions and feedback on critical issues related to the customer experience.

Parting Words

The key to success is to embrace customer-centricity first (that requires the challenging of conventional approach to management and organizational structuring, among others) and then engage customers on a continuous improvement journey. This voyage of discovery is powered by advanced data analytics that furnish the rich insights required to support customer-centric decision-making and ultimately long-term and sustainable growth.  

Ends

About Performax360

Performax360 (www.performax360.com) is a real-time stakeholder engagement, collaboration, and business intelligence software solution that enables organizations to engage key stakeholders on critical issues. It automates stakeholder feedback capture, analytics, reporting, collaborative action planning, and action plan implementation monitoring.

With Performax360’s 3-step digital engagement process (discovery, analysis, and action), organizations can ensure that stakeholders are engaged during the strategy development and strategy execution process and have a voice on critical issues. Organizations can ensure ‘continuous touchpoints’ with senior, mid-level, and junior staff throughout the enterprise, so that it can maximize their contribution and participation in the strategy development and continuous refinement process. This helps with: (1) progressive steering of the strategy based on collective intelligence, (2) uncovering hidden risks based on grass-roots operational intelligence, and (3) collaborative innovation based on ongoing feedback capture.

In addition, Performax360 carries out stakeholder sentiment analysis, powered by IBM Watson cognitive analytics, which allows management teams to gain an unprecedented level of insights into stakeholder sentiment and emotions on all critical strategic and operational issues relevant to the organization. This analysis is carried out in real time, which contributes to organizational agility and responsiveness. Finally, Performax360 supports collaborative action planning and action plan implementation monitoring, thus facilitating stakeholder buy-in during the strategy execution process.

About the Authors

Dr. Samir Asaf is currently President and CEO of Performax Inc. Formerly, he held positions including Senior Advisor at the World Bank and Financial Director at AT&T Corp. and Group CEO at Rahimafrooz.

Author of ‘Executive Corporate Finance: the business of enhancing shareholder value’ (Financial Times Prentice Hall, London, 2004), he is currently a Board Leadership Fellow at the National Association of Corporate Directors (NACD), USA; and a Fellow and Chartered Director at the Institute of Directors (IOD), UK. 

A graduate from Boston College with a BSc in Business Administration. He completed his Doctorate in Business Administration from SMC University; MSc in Economics from London School of Economics; Advanced Management Programme from Oxford University; Professional Certificate in Data Science and Enterprise Systems Engineering from MIT, and Graduate Certificate in Artificial Intelligence from Stanford University.

He is a Strategic Management Professional (ASP), Certified Customer Experience Professional (CXPA), Project Management Professional (PMI), and Kaplan-Norton BSC Certified Practitioner (Palladium); and Certified in the Governance of Enterprise IT (ISACA). He is a Business Excellence Assessor for EFQM and Malcolm Baldrige Frameworks, and a Certified Quality Auditor (ASQ); Certified in Digital Business Transformation from Boston Consulting Group (BCG); He was a research scholar in Finance and Strategy at the Harvard Business School (1998).

James Creelman provides expert guidance in strategy management to private and government organizations across the globe.

James’ main focus areas involve guiding leadership teams in the building and implementing of:

  •  Agile and Adaptive Balanced Scorecard Frameworks
  •  Integrated Strategy Formulation and Execution Approaches for the Digital Era
  •  Strategic Risk Management
  • Strategy-Aligned Corporate Cultures.

The author of numerous books, articles and blogs, his most recent books include:

  • Agile Strategy Management in the Digital Age: how dynamic balanced scorecards transform decision making, speed and effectiveness (Palgrave Macmillan, 2018). Co-authored with David Wiraeus.
  •  Doing More with Less: measuring, analyzing and improving performance in the government and not-for profit sector (Palgrave Macmillan, 2014). Co-authored with LinkedIn Influencer Bernard Marr.
  • Risk-based Performance Management: integrating strategy and risk management (Palgrave Macmillan, 2013). Co-authored with Andrew Smart.
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