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Navigating the Complexity of a Customer-Centric Transformation

February 17, 2021

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Last month the CDPa published a tool to help you assess your organization's customer centricity maturity. If you gave that a read, you probably have a good idea of where you are on the spectrum: stage 1 or 2, with a long way to go, or stage 3, the midway "Aspirational" stage. Maybe you're at stage 4 (Enterprise-wide) or 5 (Advanced) — but don’t worry if you’re not at 4 or 5, since very few companies are.

The vast majority of you are in companies at earlier stages, so you have a daunting job ahead of you if you want to move the needle on your business' customer centricity maturity: you need to create significant organizational change. Even if you have a customer centricity approach geared toward a small subset of your customers (like VIPs), getting the rest of the way there still involves massive and complex organizational change. Time to transform your business' structure and processes, its approach to goals, its strategy and elements of its culture. Ambitious? Herculean? Sure, but you aren't interested in this because you go for easy fixes.

Organizational change is the way strategies are executed, and innovation strategies like customer centricity are no exception. So the first step is calling this what it is: an innovation strategy that will require deep, systemic organizational change.

From there, senior leaders in organizations need to turn their attention in two directions simultaneously: culture and structure.

Cultural Support for Customer Centricity

A 2011 Booz & Company study looked at the performance difference between:

  1. Companies with low alignment of their core business strategy to their innovation strategy and low cultural support for their innovation strategy, vs.

  2. Companies with high alignment and high cultural support.

It won’t surprise you that companies in the second bucket are the winners. Measured by five-year compound annual growth rate, bucket #2 beats bucket #1 by an average of 3%. In a competitive industry, this “Alignment Gap” is enough to declare a winner and a loser.

The takeaway is: if you don’t create cultural support for customer-centric innovation, you’ll be fighting an uphill battle. Luckily, customer centricity tends to be super-exciting to employees, especially if there’s untapped aspiration to be more customer centric. And there usually is, because pride of association with a brand ties closely to reputation and customer experience. Use your normal means of communicating strategy to your teams, but enrich it with real, feasible stories of customer experience post-transformation.

For example, if today’s customers are still wading through an outdated e-comm experience or have to give customer support their life story when they call for help, paint a picture of what it’s going to be like when the reverse is true – and the brand affinity, sales, and all-around customer and employee satisfaction that the new customer experience will drive.

Err on the side of over-investment in creating this beautiful picture. Get everyone excited about what this means, not just for the business and its performance, but for the feeling of being a leader in the space.

Structural Enablement for Customer Centricity

There’s usually no customer centricity department (though, in some interesting cases, there is – email me if you want to talk about that), so like most innovation strategies, customer centricity is distributed cross-functionally. That means you have to focus on creating high-leverage changes to existing process and structure, within and across departments – as few changes as needed to get the job done, so, high-leverage changes only. Here are some examples of high-leverage changes:

Decision making: The decentralized nature of innovation strategies means it’s hard to know who’s in charge, and who arbitrates and makes a decision in the event of a friendly disagreement. One idea to get ahead of this – bear with me, it’s a classic for a reason – is the Customer Centricity SteerCo (steering committee). If you’re the CEO, chair it. If you’re not, request the authority to speak for the CEO on a specific set of issues on which you and the CEO are aligned. Be clear that the group’s purpose is to create strategy and review progress over time, making quick decisions along the way to optimize.

Incentives: This is too often an afterthought and thus too often gets pushed off to next year. As early on as possible, talk to functional leaders in IT, Data Science, Marketing, Merchandising and/or other relevant groups to understand how goals and incentives work in their organizations. Offer ideas and ask questions about how those things could change in ways that create clarity and excitement, and incur costs in line with results. You’re likely to encounter all kinds of entrenched and totally different practices across teams, so consider partnering with someone from your People / HR / Compensation function to help you create coordination and consistency as you go. This part of the job isn’t done until the heads of each affected function are excited to talk to their teams about the transformation.

Group effectiveness: You’re going to have people interacting across teams in new ways, so err on the side of over-investment in facilitating cross-functional interactions, even setting aside your own or a designee’s time for this purpose. It’s never been more important that IT and Analytics are marching in the same direction, or that Product, Finance and Marketing teams are set up to ideate and co-create new offers to drive acquisition and loyalty based on an improving understanding of the customer. If cross-departmental meetings don’t have an impartial facilitator, they’ll go as dictated by politics and personality.

If you spend too much time engineering and re-engineering any of these structural considerations, you’ve probably got a support and buy-in problem, and it’s probably worth it to pause and ask what’s blocking further cultural support before optimizing structure.

To sum up, while there is plenty of complexity to navigate, the juice is worth the squeeze: for many businesses, this has the potential to be the most positive, aspirational, and unifying change in a generation. Why? Because no one disagrees with customer centricity as a key innovation strategy, but only recently do you have access to the tools and technology that make it possible for you to accelerate toward the target.

Got other ideas or experiences to add to this list of things to expect and how to anticipate common challenges? Please share them!


This post originally appeared on The Customer Data Professionals Alliance (CDPa) blog.