Chapter 7

Customer Focus Is a Process—Not an Event

We’ve mentioned before that launching and sustaining the customer focus journey is not for the faint of heart. Just like any business strategy, staying the course requires a company to anticipate and be ready to decisively address the obstacles that will arise over time. One thing we too frequently see companies do at the outset, which creates a self-inflicted obstacle, is to call their customer focus a program, initiative, project, campaign, or some other seemingly temporary endeavor. These terms or labels paint the entirely wrong picture and create the wrong expectations. Moreover, these labels are often associated with the same derailers or pitfalls that cause such events, or initiatives du jour, to end up on the program scrap pile. As mentioned earlier, a number of people will instinctively look for ways to distance themselves from anything they view as a flash-in-the-pan event. They feel that, like so many other prior initiatives, this one too shall pass. I outlasted this company’s last “brilliant idea,” and I’ll outlast this one. That’s one reason why we very purposefully refer to customer focus as a journey or a process.

Regardless of what you call it and how enduring your resolve is to see it through, moving from Level I to Level II will require you to anticipate and manage some key derailers or momentum killers. Over the years, we’ve come to realize there are a number of recurring actions—no matter the label you choose to describe them—that typically cause a company’s customer focus to stall, particularly at Level II (if not Level I). The 10 derailers we most frequently see are:

We’ve already discussed the first six derailers, and hope you are now better positioned to address them—if not anticipate and avoid them in the first place. We will address the last four derailers as we proceed through the Level III steps and techniques.

One other critically important obstacle is the failure to understand and treat customer focus as a process. While process is inferred in several of the above derailers, we want to discuss it separately and more fully because of the role it plays. Specifically, there are two factors that underscore its significance. One is the fact that customer focus is a process and, as such, does not have a completion date. The customer’s definition of and need for value is not a finite or stationary target. There are aspects of it that won’t change very much or very often, but other aspects of it will continually morph and evolve. Like you, your customers have their own markets and customers that they serve. As their customers grow, shrink, and change, so too will the resultant needs of your customers as they respond to those changes.

In addition, your competition is not going to idly sit by and watch you tighten your grip on your customers without putting up a fight. Whatever unique value you provide your customers will eventually become the target others are aiming at. And they’re not aiming to just hit it, but to shoot through and surpass it.

Competitive advantage has a shelf life, and it’s only a matter of time until today’s point of differentiation becomes tomorrow’s point of parity. You can’t sit still. You must continue finding ways to be unique. In sum, the steps of understanding and providing customer value form a continuous process that can never be considered “finished.”

The other important reason for viewing customer focus as a process is because it is actually a series of processes and subprocesses. Whether we’re talking about the sales process, production and quality assurance processes, order entry and fulfillment, installation and service, credit, claims, or warranties—they are all processes. The purpose of Level I is to find out (detect) what aspects of those processes are stopping you from meeting the customers’ expectations and needs as desired. Level I almost always results in a supplier discovering a process that’s broken, not working optimally, doesn’t yet exist, or is not integrated as well as it could be with other internal processes. It’s vital that a supplier company understands, and knows how to evaluate and improve its processes.

Level II is geared to learning more about the customer’s internal processes that touch your processes so you can discover ways to deliver value that’s greater, faster, or better than what you currently deliver or what the competition can deliver. Level II is less about fixing processes, and more about aligning and integrating them with the customer’s processes—thus optimizing them. The need to understand and optimize processes is even more critical at this level than it is at Level I.

In short, no customer focus journey is going to go very far or be very successful without the supplier company, and possibly certain customers, closely examining their related processes and making fundamental changes or improvements to the way they function and support one another. Step #6 of our 10-point framework addresses this process orientation and deals with several different aspects or dimensions of it.

Value Chain and Business Modeling

One aspect of process orientation we urge organizations to focus on is in helping your employees understand the company’s position in the broader value chain or value creation process. It’s surprising how many employees, even sales personnel, don’t know how their company’s products or services are used in their customers’ businesses. And it’s also helpful for employees to have a general sense of how the company’s supply chain affects its ability to meet customer needs. Generally describing or illustrating the broader value chain to them also reinforces the fact that your company doesn’t exist in a vacuum or for its own sake. It exists only insofar as there are customers to buy your products or services. And you can provide those products or services only insofar as you have the right supply chain supporting you. Figure 7.1 illustrates a basic and generic value chain that we’ve had companies build out and tailor to their respective customer and supplier segments.

Figure 7.1 A Basic Value Chain

We’re not talking about trying to make your employees experts in this area, but just generating their broad appreciation for it can be helpful. We’ll talk more about the value chain perspective and implications at Level III.

Many companies go further than this and actually map out their key business processes or functional areas to show how they connect to each end of the value chain. (See Figure 7.2.) Again, this is a very basic illustration of what we mean. It is not intended to be a technical mapping and explanation of a formal business model.

Figure 7.2 An End-to-End Process for Creating Customer Value

Mapping Customer Focus Pivot Points

Another aspect of process we view as important is to identify and portray how the various supplier functions, processes, or people actually touch the customer’s functions, processes, or people. The benefits of these process maps are to:

• Document the end-to-end customer experience with the supplier company.
• Show how specific functions or roles in the supplier company affect the customer experience.
• Identify who the right supplier personnel (touch point owners) are for responding to function-specific problems or opportunities revealed through the supplier’s VOC efforts.

The level of detail we’ve seen used in these customer experience or focus maps can vary widely from company to company. Some companies document their map only at a very high level—portraying only the macro processes or steps in the customer’s experience. We often refer to these macro steps as pivot points because they represent points where the customer’s experience or the supplier’s focus significantly shifts, or pivots, between key processes, functions, or steps. (See Figure 7.3.)

Figure 7.3 Customer Experience Pivots from Point to Point, Version A

In Figure 7.3, the arrow labeled First Impressions represents any steps or activities designed to promote the brand or generate customer demand, such as market research, marketing, advertising, and other indirect selling activities. The arrow labeled Pre-Sale Activities refers to all direct selling activities or steps up to and resulting in a closed sale. The term Manage/Meet Expectations includes everything from formally closing the sale to delivering, servicing, and supporting the resulting customer order or account. And the final arrow in this example, labeled Leverage Loyalty, refers to repeat sales efforts, cross-selling or up-selling efforts, generating customer referrals, and securing customer testimonials. That last pivot point is one that most companies don’t consciously, proactively, or sufficiently address. We’ll talk about that more in Level III.

Version B (see Figure 7.4) of our pivot point diagram shows another example of macro level touch (pivot) points labeled with more self-explanatory terms across the spectrum of the customer experience: sales visit, purchase, financing, and service.

Figure 7.4 Customer Experience Pivots from Point to Point, Version B

This last example, Version C (see Figure 7.5), is a more granular and comprehensive view that looks at the customer’s experience but more from the supplier’s perspective or focus. Attract, Acquire, and Retain are straightforward terms. Engage refers to what this company would be doing to create the deeper relationships and barriers to entry we’ve already discussed. Develop refers to the supplier’s efforts to further penetrate the customer’s share of wallet (SOW) (i.e., develop or grow the account). Leverage in this example is very similar to the Leverage Loyalty step described in Version A. Exit includes customers who left on their own as well as customers whom the supplier wanted to leave and may have forced, helped, or “allowed” to leave. And the regain step reflects any efforts to win back a customer who has defected.

Figure 7.5 Customer Experience Pivots from Point to Point, Version C

Mapping Customer Experience Touch Points

Touch point maps are typically more detailed than the pivot point maps discussed earlier, and as such include significantly more process and subprocess steps. Each touch point usually represents discrete, readily discernible tasks and activities that take place at various points of the customer’s experience. Some companies map every single touch point that exists, while others map only the more critical touch points or anticipate moments. These are the touch points where customer value can be either created or destroyed, or be either improved or diluted. In short, anticipate moments are the touch points that make a real difference in the customer’s experience and view of the supplier, and as such significantly differentiate the supplier (negatively or positively) from the customer’s other suppliers.

The customer experience touch point map shown in Figure 7.6 is for a software development company. Across the top horizontal axis, you’ll see four pivot points: Pre-Sale, Sale, Install, and Support. Under each pivot point you’ll see the touch points making up each pivot point, with each touch point representing a specific process, task, or activity that involves or impacts the customer. The vertical axis on the left represents the company’s various departments or functional areas. The cells formed by the resulting matrix are then used to reflect each department’s role (D = direct impact; I = indirect impact; blank cell = no impact) in engaging the customer at each respective touch point.

Figure 7.6 Customer Experience Touch Point Map

Process orientation isn’t as much about mapping processes as it is a mindset and discipline of identifying, evaluating, informing, and improving them. We have taken time to delve into value chain and touch point mapping a bit because it is often the starting point for any process evaluation and improvement effort, and it can play a significant role in helping everyone see the customer’s role in the company’s business, and the employee’s role in the customer’s experience. The maps, as tools in and of themselves, are quite informative and instructive. The real gains in effectiveness and efficiency, however, come from improving your processes.

Below are just two of the myriad documented examples of customer-driven process improvements.

GE Appliances (GEA) and Sears (who sold certain General Electric brands and had become GEA’s largest customer) joined together to examine their mutual processes and relationships in five key areas: appliance delivery, billing procedures, inventory management, in-store merchandising, and customer and market information. Together they questioned procedures that had outlived their usefulness, looked for ways to remove the redundancy in their mutual processes, and tried to reduce the relationship to its most essential factors or drivers. The results of this early effort between the two companies set the stage for a broader, longer-term joint focus on production, sales, and inventory.1

Another example came from the fiberglass products group of PPG Industries. The fiberglass group was working with an automotive parts manufacturer who was developing a fiberglass-reinforced plastic suspension spring for a major automobile manufacturer. But PPG encountered problems when no matter how they formulated the fiberglass, the customer was not able to create a strong enough bond between PPG’s fiberglass component and the parts manufacturer’s plastic materials. After a series of product failures, the two sides (PPG and their parts manufacturer customer) reached an unusual agreement. The customer would help PPG re-create their proprietary bonding process within PPG, and they would work together to test different fiberglass components using the customer’s bonding process under varying conditions. The effort resulted in a successful new application for fiberglass that would later expand beyond the automobile model it was initially planned for.2

And one final example that we were recently personally involved with pertained to a global supplier (let’s call them ABC Inc.) who was servicing a global energy company, but was only serving a small percentage of the energy company’s total operations (i.e., the energy company only used ABC Inc. in 20 percent of the countries where they both conducted business). The supplier wanted to identify and improve the processes that the energy company felt were key to expanding ABC’s business with more of the energy company’s locations. Working together, they identified two specific processes one or both sides could improve to increase the suppliers’ business in other countries. One process was the customer’s demand forecasting system. It was very inconsistent from country to country, causing dramatic and quick (unexpected) changes in inventory levels for ABC. This often caused missed delivery dates for the customer, and significant costs to ABC as the company was forced to quickly switch the destinations of major deliveries.

The other issue they jointly identified as a problem was ABC’s process of informing their own facilities in different countries about the availability of new services or products, and how existing customers in that country could leverage the new services and products. For example, ABC had a new technology that allowed customers to use a cheaper and safer product in conjunction with one of ABC’s services. The new technology had been launched in the United States, was in the process of launching in Western Europe, but had not been launched or even communicated yet to ABC’s facilities in the Middle East. When the customer’s plant manager in the Middle East heard about the technology, but didn’t know it was from ABC Inc., the plant manager unknowingly started calling around to various suppliers to see if he could get access to the new offering. Unfortunately, a competitor of ABC was able to convince the plant manager that they could match the lower price of ABC’s improved offering, and the plant manager agreed to a six-month contract with the competitor. Had ABC’s Middle East team members known about the new technology launch, they would have been able to keep the competitor out of the picture. Now, both sides have agreed to look at ways to be more transparent in their evolving needs and solutions, but still protect their respective needs for confidentiality and intellectual property protection.

These are just a few examples of the process improvements that can be discovered and implemented to improve a supplier’s business outcomes.

Before we leave this discussion of process orientation, we’ll offer one other tool that has helped a number of companies. When a supplier company is in Level II and has a voice of the customer (VOC) process comprised of multiple listening posts, and is making progress at deepening the insights and foothold gained at various touch points in the customer organization, they’ll not lack for things to address. To the contrary, there will be more ideas, opportunities, and challenges than the supplier company will be able to feasibly tackle at any given time. Prioritizing is very important. There are many ways companies can prioritize the order in which they’ll pursue various process improvement challenges and opportunities, and all of them serve a purpose.

We like to use a model that identifies the challenges and opportunities that are most important in two respects. One is the degree to which they represent a problem, weakness, or risk to your customer portfolio. The other is the degree to which they link directly to your existing business strategy. The Value Driver Priority Matrix (see Figure 7.7) can be used to plot your long “to-do” list and prioritize it based on their customer–strategy connection.

Figure 7.7 The Value Driver Priority Matrix Helps Rank Your Priorities

The intent of the Value Driver Priority Matrix is to help a company prioritize those actions that build the most value for the most stakeholders. In this tool, we assume the key stakeholder groups are the company’s customers (horizontal axis at the bottom) and the other stakeholders served by the company’s strategy (vertical axis at the left). The supplier’s long list of actions, gleaned from their VOC efforts or extended Level II touch point efforts, are plotted on the matrix based on whether they represent something customers are very satisfied with (high) or very unsatisfied with (low); and whether the action has a low or high degree of linkage to or alignment with the company’s business strategy (or operating plan in some cases).

The quadrants in this particular version are explained as follows:

The process orientation we just discussed clearly creates work for any supplier company committed to reaching the increasing profitability the customer focus journey can bring. We have rarely heard a company (supplier or customer) tell us that the process improvement efforts they undertook weren’t worthwhile.

That’s not to say some don’t come away disappointed. Most often, those who are disappointed by these efforts come up short for one of two reasons. One is that they approached process improvement as a quick fix exercise and didn’t commit to doing it well the first time. This includes failing to flush out and fix root causes, not engaging customers at appropriate stages or decision points, or underestimating the amount of cultural change or resistance certain process improvements might require.

The other typical reason some are disappointed by process improvement initiatives is their reluctance or inability to make tough decisions along the way. For example, you can’t build or improve a process and not have people who are willing and able to support it. Companies too often try to “bend” a process around their problem performers rather than move these performers out of the way. Another example is not being willing to deal with sacred cows such as a process that was put in place by a legacy member of the company. If it is no longer relevant or effective it needs to be shut down or improved—regardless of whose brainchild or pet project it was. Another sacred cow we often encounter is a process that was created or changed to satisfy a large customer but requires more work than that customer’s business with you would justify. That process either needs to be changed or the customer beneficiary needs to absorb the cost of continuing it.

For the most part, however, companies come away from most process improvement efforts admitting that they are better off after than they were before they undertook the effort. Even though it does create work, that work can often be something that is shared by you and your customer(s). We briefly mentioned joint project teams back in Chapter 5. This is where their value becomes even clearer.

Most suppliers miss the opportunity to use their process improvement challenges as opportunities to engage, and stay engaged with, their customers. Most customers have some level of vested interest in your customer-facing processes being as effective as possible. And some customers will be willing to work with you to evaluate, plan, and implement steps that improve that effectiveness.

We’re not suggesting you should ask for a customer’s help in every process undertaking—not even in most of them. On a very selective basis, for those projects where it clearly makes sense, and the customer’s potential gain is clear and meaningful, the idea of it becoming a joint project should not be dismissed outright. For every process improvement challenge you or your customers identify, your first internal question should be: is there a customer who can benefit from this such that they would team with you to work through it? Recall the GE-Sears and PPG examples. It can happen, and does happen—more often than you might think.

Value Chain Labs® —the Ultimate Dialogue

Before leaving Level II and starting the transition into Level III of the Customer Focus Maturity Model®, we want to mention one more technique that can come into play at Level II and help a supplier move into and sustain Level III. It’s called a customer–supplier workout, and it actually is an extended and deeper form of joint project teaming. We first became aware of this unique and powerful form of cross-boundary engagement when GE used it. Soon after that, we experienced these workouts first-hand at Coopers & Lybrand (the firm subsequently merged in 1998 with Price Waterhouse to form PriceWaterhouseCoopers). There, learning under the external expertise of David Ulrich, who had worked directly with the GE workouts, we designed a client–provider (customer–supplier) workout initiative that would ultimately be conducted with several dozen of the firm’s clients (customers).

We also studied similar cross-boundary processes used by such companies as PPG Industries, Motorola, General Reinsurance Corporation, and Ford Taurus. Based on that information and our prior experience, we developed Value Chain Labs® over 10 years ago to help companies break down the barriers between, and optimize the mutual gains of, their customer–supplier relationships.

Value Chain Labs® is a carefully designed and closely facilitated workout process that brings a customer team and supplier team together to critically examine and improve their relationship with the ultimate goal being one of a mutually profitable and sustainable association. The issues the labs probe aren’t always process-oriented issues. They might involve quality, costs, productivity, relationships, management systems, business systems, competitive threats, new product innovation, emerging markets, and myriad other issues or opportunities. They might be corrective discussions, fact-finding, or forward-looking discussions. The types of issues addressed by these workouts have covered the gamut of possibilities. The GE Appliance–Sears example earlier in this chapter was one of GE’s early customer–supplier workouts. The global supplier (ABC Inc.) and their global energy customer discussed earlier was an example of a Value Chain Labs® workout.

The typical Lab takes approximately eight hours to conduct, although some have been longer, some have been shorter, and some have resulted in a series of subsequent Labs with other business units or functions in a particular customer–supplier connection. Three core elements make up the Value Chain Labs® workouts:

The most effective Labs have been those with six to eight participants from the customer company and six to eight comparable participants from the supplier company, with those participants representing the key touch points in that particular relationship. We have had Labs with as few as 4 and 4 or as large as 12 and 12. An example of the participants from one of the more recent Value Chain Labs® is shown in Figure 7.8.

Figure 7.8 Lab Participants from Customer ABC and Supplier XYZ

The above participants were part of a Lab that produced the following outcomes, among others:

For the Customer

• Identified roadblocks that were impeding progress and communications (internally and externally).
• Lowered procurement costs—less overhead and time through better focus upfront.
• Reduced operating costs since feature and function nuances and risks were built into product and service design.
• Positioned ABC to benefit early from new XYZ technologies, service enhancements, and resources.

For the Supplier

• Built customer loyalty and allowed XYZ to earn more ABC business through better performance.
• Improved resource utilization by redeploying resources to key value-creating processes and issues.
• Eliminated non-value-add activities to reduce operating costs and improve productivity.
• Aligned XYZ’s approach and related key processes with ABC’s business drivers.

Value Chain Labs® have been used successfully in dozens of different customer–supplier situations. Of those, generally speaking, 25 percent of the labs were for newly established relationships where the parties just wanted to ensure a successful launch or they had bad prior experiences and wanted to avoid a repeat in the new relationship. About 50 percent were for existing relationships where the parties wanted to take their partnering to the next level (i.e., usually moving from Level II to Level III), smooth out some rough spots, or become more consistent enterprise-wide. The other 25 percent were for at-risk situations where the customer was clearly unhappy, shopping competitive bids, or failing to renew a contract (most of these were at Level I).

We’ll be discussing additional applications and outcomes from similar workout processes in later chapters. The key takeaway at this juncture, however, is to understand the powerful role joint workouts can play in creating engagement between customer personnel and supplier personnel, and directing that engagement around the review and improvement of mutually important processes. Once an organization develops some level of comfort and competency around the workout process, the next logical and natural extension is to use workouts to shape and drive the cultural adjustments and gains of Level III. While we present workouts here in our Level II discussion, they clearly are a tool that plays equally important roles at both Level II and Level III, which we’ll discuss in Chapter 8.

1 Dave Ulrich, Steve Kerr, and Ron Ashkenas, The GE Work-Out: How to Implement GE’s Revolutionary Method for Busting Bureaucracy & Attacking Organizational Problems (New York: McGraw-Hill, 2002), 206.

2 Ron Ashkenas et al., The Boundaryless Organization: Breaking the Chains of Organizational Structure, (San Francisco: Jossey-Bass, 1995), 238.