Changing the culture to a customer-centric organization
Portfolio, Program, and Project Management Author, Consultant and Educator
Programs and projects are done for customers, whether internal, external, or hidden. In our work we need to actively engage customers to focus on them for business value. From the time programs and projects are selected, business analysts or others determine customer requirements and make the business case to show how they will add value to customers. Our goal is to anticipate customer requirements and involve customers from the beginning and after project completion. The emphasis then follows to ensure customer requirements are met regardless of the methodology that is used.
However, the Project Management Institute (PMI) points out in its Pulse of the Profession® report that too many programs and projects fail to meet customer expectations, and the result is a decrease in customer satisfaction, cost overruns, decreased morale and productivity, and lost investment (PMI, 2014b). It is time to actively engage customers throughout and to change the organization’s culture, whether it is for profit or not for profit, to one which is customer focused. The goal is to anticipate customer requirements and then involve customers in the process from the beginning until and even after the program or project is complete. To do so means changing the culture of the organization to reverse the declining trends now apparent across the globe. This paper describes why a customer-centric organization is one to embrace, discusses key roles to make it successful in this mode, and presents guidelines to facilitate its adoption.
Why a Customer-Centric Approach Is Required
Consider the following example. In the 1960s the United States (U.S.) had more than 100 Class 1 railroads. These railroads are the ones that had the greatest infrastructure, with the greatest net profits, and which had annual operating revenue at that time over US$1 million. Earlier railroads led to the creation of the interstate Commerce Commission (ICC), the first U.S. regulatory agency in 1887, to regulate the rates railroads could charge, and the ICC set up a railroad classification system with Class 1, 2, and 3, based on size and profits. Later, the ICC also was charged to regulate the motor carrier or trucking industry, and the Federal Maritime Administration was established to regulate the shipping industry. Over time the net operating revenues were increased to be a Class 1, and by 1978, only 41 railroads were in this category. What happened?
The railroads did not focus on their customers, they did not invest in upgrading their infrastructure, they operated in a competitive manner at switching stations and ports, and customers looked instead to the motor carrier and barge industries to transport their products. The railroads and their trade association, the Association of American Railroads (AAR), blamed the ICC and its inability to set flexible rates for its services. Many considered the railroad industry to be one that was “doomed” and could not recover. The situation led to the Staggers Rail Act of 1980, implemented by the ICC (now known as the Surface Transformation Board) as railroad deregulation began. In 2014, only about 20% of traffic remains regulated.
Rather than being doomed, market share began to slowly increase along with return on investment. Contracts with shippers began to be the norm, and shippers have seen costs decrease. In 2013, the AAR reported there were seven Class 1 railroads in the U.S., generating operating revenues of over US$430 million, and the freight railroad industry is considered dynamic, with up-to-date technology, and profits of approximately US$60 billion dollars. These railroads provide numerous benefits, including reduced traffic congestion, fewer highway fatalities, a reduction in greenhouse emissions, and decreased logistics costs, public-funded infrastructure costs, and hazardous materials incidents. Railroads provide their own funding to upgrade the infrastructure and add system capacity. The industry shares information among the Class 1 systems without becoming a monopoly and encourages use of Class 2 and 3 systems as appropriate. Rather than compete constantly with the motor carrier industry, they foster partnerships; there also is cooperation with the shipping industry at ports.
Projections are railroads will continue to thrive in the U.S. freight market. As noted by the Federal Railroad Administration: “The freight railroads in the U.S. are poised to meet these challenges by offering multiple transportation solutions in a constant effort to meet customer needs… As the U.S. population expands, the U.S. freight system will be called upon to meet the demands of a larger population. Between 2010 and 2035, the system will experience a 22 percent increase in the total amount of tonnage it moves. By 2050, with an estimated 420 million people in the U.S., the increase is projected to be 35 percent” (Federal Railroad Administration, 2014).
Working in the rail industry (in two trade associations, one Class 1 railroad and five government agencies involved in rail transportation) from 1967 to 1981, was a time of both disappointment and excitement. Disappointment—as the share of the freight market declined, the infrastructure was not kept up to date, cooperation was avoided by any means, and finger-pointing was the norm; excitement—as deregulation began to change the environment and led to what today is the example of a customer-centric industry with expectations of further growth and benefits and contributions to the U.S. society.
Recent Data and Research
PMI since 2006 has been surveying project professionals from around the world and issuing Pulse of the Profession® reports. Its 2014 report, The High Cost of Low Performance, points out that only 9% of the executives in organizations surveyed state their organizations can “successfully execute initiatives to deliver strategic results,” which in turn means “only 56% of strategic initiatives meet their original goals and business intent” (PMI, 2014b, p. 2). This report further explains the necessity of ensuring programs and projects are aligned to strategic objectives, and successful organizations can adapt easily to changing conditions.
Within this report, a section describes changes in the “customer landscape” and notes the role of customers influencing an organization’s strategy is expected to increase dramatically. For example, the report quotes Virginia M. Rometty, the President and Chief Executive Officer (CEO) of IBM, who explained from past IBM research “in 2004, CEOs ranked their own customers sixth of the list of all market factors they believed would drive the most change in their organizations. Today, digitally enfranchised and empowered customers lead the agenda for every CxO profession” (2014b, p. 7). She further explains IBM’s research results show that in the next three to five years increasingly CEOs will “include customers in every part of their business and 40 percent more CEOs plan to include customers in their organization’s business strategy department compared to today” (p. 7).
IBM’s research supports that of others. For instance, Deloitte’s lead partner, Scott Wheatly, stated in 2012: “The ability to deliver depends on the extent to which ‘customer-centricity’ is embedded within every single person in your business” (p.1). Accenture’s research further supports this trend, noting “customers today expect an imaginative, high-quality experience in a multichannel environment…your company can leverage new strategies and technologies to create operations capable of making good on your customer-centric promise and growing your business”(Robinson & Brown, 2012, p. 1). PricewaterhouseCoopers (PwC), in its February 2013 report on the customer-centered organization, focuses on the importance of “seeing things from the customer’s perspective—outside in—and making that view the core of your strategy may be the most important thing that sets you apart from competitors” (p.1).
Is Customer Centric a New Idea?
The term “customer centric” began to be used in the 1990s. It differs from customer service, which always has been a purpose of project management and the resulting products and service, as it means adding value to the organizations, creating a positive experience for the customer, and differentiating the organization from its competitors. The objective is to treat customers so they are part of the solution before and after the product or service is completed. As Galbriath explains “being customer-centric literally means organizing around the customer” (2005, p. 1). He emphasizes it differs from the product-oriented company, in which the organization is finding customers for its products to one in which the organization is finding products for its customers. Fader (2012) states it is: “a strategy to fundamentally align a company’s products and services with the wants and needs of its most valuable customers. That strategy has a specific aim: more profits for the long term” (2012, p. 9). He further explains to achieve this strategy, executives must “radically rethink organizational design, performance metrics, product development, and more…finding new and unique ways of serving the customers who matter the most…there are good customers…and then there is everybody else” (p. 10). Fader suggests for customer centricity to become a reality, one must recognize fundamental and inevitable differences among customers, focus long-term marketing efforts on those customers with long-term value, quantify the value of each customer for greater insight, and gather as much information about customers to serve them in a personalized manner (pp. 115–116).
With all project work done for customers, is this emphasis on customer centricity a new idea? From the beginning customer service has been a major tenet of organizations, and customer relationship management has been a cornerstone since the 1980s; the difference is today with the complexity and rapid change, which is the norm and not the exception, the focus shifts to those customers who add strategic value rather than an emphasis primarily on customer retention.
Making Customers a Part of the Solution
It begins with marketing and sales, again internal or external, with a close collaboration from the start with the sales or campaign manager and the customer. If work has been done with the customer previously, the program or project manager is actively involved rather than having limited interaction with the customer once the program or project ends. The emphasis changes from a short-term customer relationship to a long-term one, with active customer involvement. This approach causes a cultural shift in communications, as the customers are part of the solution from the beginning rather than receiving only progress reports or having meetings at scheduled intervals. The customer works to select initiatives to pursue and often is a member of the portfolio oversight group and the governance group. This active involvement then transcends to marketing once the initiative is complete, with customer representatives often leading the way. With customers actively engaged, their leaders often in turn recommend the company to others.
It is equally important in other environments. For example, a university with one of the first online master’s degree program in project management soon faced extensive competition from other universities across the globe. It noted enrollments were steady but were slightly decreasing. It asked representatives from a diverse group of customers where many of its students worked in program and project management plus other organizations in which no students were enrolled to be members of an external advisory group to obtain ideas and suggestions as to how to improve its offerings and again make the program one that potential students would consider best in class. The representatives suggested it enhance its offerings to focus not only on the core courses but also on interpersonal skills and advanced courses in program management, agile, change management, supply chain management, and portfolio management. The university continues its use of the advisory group and has added video training and use of the flipped classroom as examples of some recommendations in some courses.
Agile Is Not Enough to Succeed
For customer centricity to become a normal way of working, the organization must be an agile one; however, agile alone is not enough to succeed. As pointed out by PMI, the “volatile marketplace demands organizational agility, a three-pronged approach that effectively leverages risk management, change management, standardized project, program and portfolio processes…organizations with prowess in all three capabilities post better project performance” (2013a, p. 1). This report further explains “highly agile organizations also meet or exceed ROI 71 percent of the time, compared with a 40 percent rate at less agile ones” (p. 1).
The organizational leaders who can quickly adjust to rapid change and reprioritize the portfolio in the process follow such an approach; however, for even greater success, which is defined in different ways by each organization, increased customer collaboration is critical. For example, assume an aerospace company had worked with a customer for more than 30 years supplying this customer with a unique product and services to upgrade it with enhanced technology. It also had other customers for similar products. The long-time customer requested the company enter a completely different market—one in which it lacked the specialized resources required to do the work and also lacked the financial investment required. Executives realized it needed to somehow satisfy this customer or lose its long-time relationship. The question was what to do and how to best engage the customer. It was a key risk and a major change, and the company over the years had standardized processes it followed. This example will be continued in this paper.
Lack of Customer Engagement = Poor Performance or No Performance
It is a myth that every customer is a valuable customer; typically 20% of all the customers generate almost all the profits, and those at a company’s bottom 20% may actually result in destroying business value. The key is to recognize the customers which truly are profitable (Selden & Colvin, 2003). “Every company in every industry will soon have to reconceive its way of doing business along these lines with customers at its center” (p. 5). There are unprofitable customers if a company’s return on capital is not much better than its cost of capital: “Think of your company not as a group of products or services or functions or territories but as a portfolio of customers” (p. 3).
Applying Selden and Colvin’s suggestions to the above example meant the aerospace company had to restructure its portfolio, which now was arranged according to strategic goals and objectives, to one which instead was set up in terms of its customers to determine whether the customer’s request even though it represented a major change, should be embraced. It set up a work breakdown structure (WBS) approach in which it classified its customers at the highest element level in terms of specific products and services it provided and decomposed each element to specific customers in each category. It linked these top-level elements to its strategic goals and objectives. It then determined the profits by customer and category. Such an approach showed that the long-time provision of avionics products and services did generate profits, but these profits had been decreasing over time as a trend analysis was conducted. It recognized that some of the customers in this category at one time no longer were purchasing as many products and services in the past. Root-cause analysis followed, showing that the aerospace company was taking these avionics customers for granted and not spending enough time with them, as it made an assumption it was a secure, niche market, and these customers would remain. The leadership team instead was focusing more attention on garnering new customers in other business areas. By formulating its portfolio around customers, it could see the emphasis had changed, and its niche products were being outpaced by competitors, meaning the company should move into new markets to grow even though the new markets required investment and change.
Customers Often Disappear before the Work Is Done
However, since change is the constant and not the norm, customers are not loyal to one organization and will change frequently, especially if enhanced products or services are available from another provider. Other providers also may offer them at reduced costs or in the service field may be able to offer talent not available at the previous company. There are an increasing number of choices for customers than ever before and often with a greater focus on organizations that are intent on growing its customer base and seeking new customers as a core business value. Leaders no longer can assume it will continue to have loyal customers; doing so in the business development field, for example, is recognized as “proposal suicide.”
To avoid it one must instead look toward its existing customers and anticipate their needs based on one’s work with them. It is far easier to retain existing customers by delighting them than locating a new customer. Such an approach requires continued business intelligence, consideration of the net profits from existing customers, and demonstration of interest in working with them at all levels, not just that of the leadership team, to form a mutually beneficial partnership. The objective is not to have the customer contact the company but to have the company recognize the customer’s requirements and propose solutions that can enhance the customer’s standing in its marketplace.
IBM Studies Point to the Necessity of Involving Customers in Business Strategy
Additional research by IBM emphasizes the benefits of customer involvement. In 2014, in a survey on insight from Chief Marketing Officers (CMO), one conclusion is the most successful organizations’ CMOs worked in conjunction with Chief Information Officers (CIO) to among other things create “digitally enabled supply chains to respond rapidly to changes in customer demand” (p. 2). This research noted only a few organizations had established social networks to engage with customers and only a few installed analytical programs to “mine customer data,” while recognizing the importance to interact with customers through different channels. It stated 74% of CMOs intended to do more partnering in the future, but there was a gap between “aspiration and action” (p. 3).
In this research, IBM classified companies in three categories. First, are those titled as “Traditionalists” or ones in the early stages or with recognition only of the need to use social networks and analytics to collect customer insight. Next were the “Social Strategists” or companies beginning to use social networks and building an infrastructure to operate in different media. The leaders it titled as “Digital Pacesetters,” or companies that are prepared and are using a variety of devices and spending resources to set up and use a physical-digital enterprise as well as using advanced analytics for greater insight from their data on their customers (p. 5).
Social media is a reality and is the natural outgrowth of information resource management, but now the tools are available to truly consider information as a major asset. Such an approach again emphasizes the need for organizations to find ways to increase their value to customers by gathering and analyzing data about their customers from numerous sources, not solely from their own interactions. They then are acting on the information analyzed to create in advance customer value. Once the product is complete or the service is delivered, it is not the end of the engagement as through the use of social media and other collaboration tools; the customer and members of the organization continue the interaction. For each customer one approach to consider is to prepare a customer engagement plan, similar to a stakeholder engagement plan routinely prepared by program and project managers, but with an emphasis on how to continually engage the customer during the work and also after the work is done. Through such an approach, the customer does not forget the company, as there is communication between them, and the company shows it is interested in the customer’s needs.
Simple to more elaborate approaches can be used. For example, people who worked on the team with the customer can follow what the customer is doing on his or her LinkedIn profile and can contact customer representatives to discuss items of interest. Another approach is at the beginning of the engagement to set up a social media site between the customer and the company and continue to maintain it after the initiative is complete.
Innovation and Transformation
Another IBM study (2013) focuses on the CIO. It notes CIOs in “outperforming enterprises, by contrast, see the world much more like CEOs. They too think technology, market factors and macro-economics will have the biggest impact—and rank them in the same order of importance” (p. 3). This study shows that CIOs still just provide IT-services, but there is a greater focus to also foster innovation. It explains CIOs are looking to enable the organization’s strategic vision as part of their daily activities by 2018, as they move further into a focus on innovation. To do so, the study explains the IT role will transition by spending more time improving the overall customer experience a well as working in sales, business development, marketing, and communications through using more analytics as one approach (IBM, 2013).
The IBM study supports the view of Murthy (2014, in Levin & Wyzalek), who further points out that over time the role of the CIO will change such that he or she is a Chief Innovation Officer. Innovation, as Murthy explains, involves the shift to mobile platforms, greater use of social media, data analytics, understanding of on-demanding serves, and increased use of Cloud and Software as a Service. The CIO is then able to focus on ensuring greater contribution to achieving business objectives. In doing so, he or she maintains existing customers while acquiring new ones working on strategy and business development. Information dashboards based on business intelligence will evolve to show their value to the business and provide transparency into the information technology initiatives.
Roles and Responsibilities for Success
The shift to a customer-centric approach is under way and is the best practice moving forward, but it is not something that should only be the responsibility of the leaders of the organization. Change can come from many areas, and often it is from those of us in project professions to be the change agents. As it is typical for people to resist change, many times it is the project professionals who must lead it. Change is inherent in the work of every program or project, meaning while we should resist changes in terms of scope, schedule, and cost, we must embrace and exploit it in terms of the benefits from programs and projects and ensure our work remains in alignment with our organization’s strategic goals and objectives. Through an approach in which we are exploiting change by work with our customers we then may find the need to suggest a change in the strategic goals and objectives to address future customer requirements. Each person, therefore, becomes a change agent and emphasizes the importance of moving to a customer-centric approach.
The business analyst, with his or her traditional work to assess the program or project requirements, often is an early contact with the customer and is the person who typically has worked with the customer in the past, often in terms of being the first contact. The business analyst from the beginning may see the need for greater involvement with the customer to ensure a continued and successful relationship. This approach does not mean he or she suggests “goldplating” in the requirements role, but rather suggests ways in which the program or project manager may best work with the customer throughout the life cycle.
Campaign and Capture Managers
For organizations working in contracting, as outsourcing continues as the norm and not the exception, leading organizations have people dedicated as campaign and capture managers. These individuals, typically part of the business development unit, have as key responsibilities to develop customer relationships in such a way that they can then position the company as the preferred provider from the beginning by ongoing informal dialogues as appropriate and monitoring customer environments. Their work requires a customer engagement plan based on studies of customer and market trends, research into product trends, and past behavior through an analysis of customer requirements, in use of direct customer feedback into previous engagements regardless if they were wins or losses, and by forming long-term relationships that customers trust with the result a basis to deliver products and services the customer expects. They work as well to emphasize ways to enable customer-related knowledge to be part of a company’s knowledge transfer system, allowing the company to develop analytics to best forecast customer requirements to best optimize performance.
Sales team members support this environment by a close working relationship. The sales team documents an account plan, which can be a standalone document or a subsidiary plan to the customer engagement plan. They also develop a solution worksheet to evaluate customer needs and requirements against existing offerings; such an approach is beneficial in terms of ensuring whether the company needs to expand its offerings to be more customer centric to retain existing customers or whether it should focus efforts elsewhere—again noting the importance of a customer portfolio process. It may then lead to a needs-benefits analysis and/or a yield analysis, with participation by the business analysts as appropriate.
The sales staff focuses first on manageable opportunities with a desired goal of a pipeline of products or services to offer to customers. They further serve as change agents to motivate others should the existing offerings require change. They set criteria to identify and qualify opportunities based on available talent, other resources, and existing work. This team as well determines whether it might be best to set up a partnership or a consortium to best meet client requirements. These decisions often are based on the company’s relationship with the client and how well a new opportunity fits current capabilities.
Program and Project Managers
Often, program and project managers are assigned to do the work without earlier involvement. Such is the typical case in a silo-driven organization but is not a recommended best practice. PMI (2013b), for example, points out program managers should be involved in collaborating with sponsors and other stakeholders to develop the business case, prepare a high-level program plan, roadmap, and charter.
Since program and project managers are responsible for delivering products, services, and benefits to customers, the early involvement enables collaboration with customers to ensure the results are what is expected and leads to work with the customers to develop and evaluate alternatives throughout the program or project to contribute to exceeding customer expectations and adding business value. Plus, program and project managers are working with customers on products and services each day so they are in the best position to foster a winning, long-term relationship doing so through active involvement and interaction with customers throughout the process.
In silo-driven organizations, marketing managers tend not to assume an active role until the product is complete; in customer-centric organizations, they are active participants in the process. Marketing continues to focus on the traditional 4Ps (product, price, place of sale, and promotion). However, in a customer-centric approach, they focus on obtaining customer data, using feedback on products and service performance as well as on the value to the customer of the relationship with the company for continuous improvement, and building long-term, trusted relationships to best engage customers such that there is an end-to-end approach.
As an example, for greater customer collaboration, marketing staff can work with customers as customers prepare and set up exhibits and present at various industry and professional organizations. Further through studies of market trends, these staff members can share appropriate data with customers on competitor capabilities, cost competitiveness, and methods showing they are an extension of the customer’s team. The goal is to continue to position the company with the customer.
Operations Managers and Others
Outstanding contributions for fostering the customer-centric approach will come from many including operations managers, people working in supply chain management, quality, security, shipping and receiving, contracts and procurement, human resources, and information technology, to list a few. PMI (2013b) describes the importance of a transition plan for programs and the need for early involvement of these key stakeholders; it becomes even more important as we move to a customer-centric organization.
For example, a major equipment manufacturer worked in a silo approach with hand offs from design to engineering to manufacturing and finally to service and operations. This latter group had responsibilities to prepare manuals, work with dealers, handle complaints, and perform routine maintenance as needed. However, the service and operations group, while it had a defined methodology in place to follow, usually was not prepared for receipt of a new product. Its manager recognized the need to work more closely with engineering and manufacturing to be prepared and decided to interface its processes with those of the other groups. Once the integration was in place, over time, productivity increased along with improved employee morale as measured by a new project management office within service and operations. People in service and operations felt more connected to the rest of the company and saw their work as adding business value and contributing to strategic objectives. Recognition of these improved and outstanding contributions from executive management followed, and people later assigned to service and operations felt it was beneficial to their careers.*
Guidelines for Consideration
Becoming customer centric then involves active engagement with customers to shape company strategy. It is a culture change, especially for those organizations that are not project based, but it is a necessity in today’s complex and competitive market. Each organization should consider where it stands today in the process. One approach is to follow IBM’s examples of whether the organization is a Traditionalist, a Social Strategist, or a Digital Pacesetter.
Using Customers to Shape Strategy
Regardless of how a company classifies itself, customers can increasingly be used in determining overall company strategy. Expanding on the concept of a portfolio of customers, using a WBS-type approach, the company can see where its existing customers are in terms of existing products and services. Companies also can see the contribution each customer makes to the overall net profits. It may be too much time is spent working actively to support customers that are in the bottom 20%. This approach enables organizational leaders to re-think the current strategy.
For example, if it is a contractor, is it focusing its efforts on win rate, or the number of competitive proposals for which it is selected to do the work, or is it focusing on capture ratio? With an emphasis on capture ratio, it then is striving to increase its net profits by bidding on and winning opportunities with a larger percentage of profits. A mid-sized company in the Washington, DC area found it seemed to have overworked employees and insufficient talent to do the work. In one year, it won 1,200 competitive proposals, yet its overall profits were low. It looked at its portfolio and found the focus was on win rate, and these opportunities were of low dollar value. It changed its approach to continue to do its best on the existing work but to begin to focus on capture ratio. This approach was one of high risks but high rewards unless it was implemented effectively. To change, the company reviewed the knowledge, skills, and competencies of its existing staff and actively used competency profiles before deciding potential work to undertake. It hired people who were successful elsewhere as campaign or capture managers and focused on the long-term with alignment with its strategic goals and objectives. By focusing on the capture ratio, in two years its overall net profits increased by 250%.
As the company rethinks its strategy, especially if it is in the Traditionalist category, it then reviews its customers and sees if its leading customers’ long-term strategic goals and objectives link to its own. It then may need to reconsider its strategic plan and make changes to it. One way to involve customers that are in the top 20% is to ask the customers for feedback on its strategic plan and see if its planned strategies meet and anticipate customer requirements. This involvement can be done through surveys, but the best practice is to meet with customer representatives to let them know your company is updating its strategic plan and ask for their input, noting the value your company places on helping the customer. If your company is beginning to collect data analytics or is a Digital Pacesetter, the meeting still is recommended for a one-on-one approach. The resulting strategic plan can then have customer focus as its overarching theme.
Focus on Anticipating Customer Requirements
The objective is to not assume one’s products or services will meet the customers’ requirements, but to anticipate them through a close collaboration with them. If the customer is the top 20%, a solution development plan is one approach with involvement from key stakeholders in the company working in collaboration with the customer. Through collaboration, customer needs can be easily adapted, and the necessary talent then can be located, whether internal or external, to best meet them. The customer can be part of shaping the solution, which in turn provides added benefits.
Everyone Has a Business Development Role
With customer focus as the theme of an organization’s strategy, everyone has a business development role as a customer mind-set permeates the organization. As this approach is a culture change for many organizations, training or orientation sessions may be needed to demonstrate executive support and show why the organization is moving in this direction. Assuming the concentration is on the top 20% of the existing customers, it should be clearly stated that the other 80% are not forgotten. They remain important, and someone needs to interface with these customers, especially those in a long-term relationship, to see how to better add value to them, if possible, and to see if the revised strategies interface with the goals of these organizations.
Moving to a customer-centric approach also may lead the organization to rethink its core values. They may be the same as when the organization first was established and may not have changed with the times. For example, Hemp and Stewart, in an interview with Samuel J. Palmisano, when he was CEO at IBM found in 2002, the same values set by IBM when it was established in 1914 remained, yet the company had become completely project based with an orientation on providing services rather than products. To foster a culture at IBM where everyone was a change agent, Palmisano realized IBM’s values required change to remove any obstacles to the new ways of working. As he did so, rather than just issue value statements with the other members of the executive team, Palmisano involved the company’s employees in a three-day session in developing a new set of values people at all levels could support. He then made changes when he saw business unit directors who were following previous practices rather than the new values and had direct reports identify gaps between existing practices. His goal was to show these values had meaning and to show staff members the new values were being used (Hemp & Stewart, 2011).
Use Customer Requirements to Reduce the Talent Gap
PMI (2014b) states in its report “a majority of companies either lack the skills or fail to deploy the personnel needed for strategy implementation” (p. 5). It further explains the requirement to emphasize talent management and by doing so and aligning talent management to organization strategy, the organization can have a significant competitive advantage.
Having the needed talent becomes critical to the customer-centric organization. Using the 20% to 80% analogy, it may be existing staff excel in work with those customers in the 80% category but require training, new technology, and different methodologies to serve those in the 20% category. By focusing on the customer requirements in this category, the organization can assess what must be done to anticipate their requirements and how to obtain the talent to do so if it is not available.
To do so, competency profiles need to be set up, maintained, and used. An assessment as to who is responsible for current initiatives and whether they are best suited in these roles or can be more effectively used elsewhere follows along with analysis of existing practices from customers and staff members to see if they are adding value or are too cumbersome follows to help improve relationships, products, and services. If customers have suggestions, it is incumbent to take them into consideration and act on them, if not discuss with the customers why another path was selected.
Focus on Customer Involvement for a Competitive Advantage
As noted by PMI (2014b) through talent alignment, a competitive advantage follows. Another approach suggested by Robison and Brown (2012) is to rethink the way business is done. They point out to do so, obstacles need to be identified, effective connectivity is required, criticism should be sought and not avoided, and an enterprise customer experience audit may be helpful.
Building on their suggestions, it is difficult to accept criticism at any level and to do so with a positive attitude, but it is possible even though one might be just repeating back the suggestions to show one is listening and to make sure there is mutual understanding of needed changes. The data that are collected then are part of the customer analytics in the knowledge transfer system.
The enterprise customer experience audit may be more effective if viewed as an assessment since often audits are viewed in terms of compliance, and an assessment is seen as a focus on areas for continuous improvement. While an outside assessor can be used, a best practice is to use someone within the portfolio management office (PfMO) or in a smaller organization to have it conducted by the portfolio manager. The lead then contacts customers, beginning with those in the 20% category, and requests a meeting face to face or through video conferencing with members of the customer organization. The purpose is to discover insight into how the overall work with the organization was done in terms of meeting customer expectations and hopefully to see if the relationship was considered as a collaborative one with the customer part of the process from beginning to the end.
While one-on-one meetings with customers in the 20% category are suggested, surveys are recommended for those customers in the 80% category with telephone follow up if requested and especially for customers with long-standing relationships. The survey beside some basic information on the most recent experience should have open-ended questions, or ones in which a scale is used that has a format other than a Likert type (or one to five or one to seven) since it is easy to cluster answers. About 10 to 15 questions are recommended, with a comment field.
The organization uses the data from the assessment to provide the basis for more effective decision making and to assess performance and engagement in terms of the engagement plan and targets. It leads to decisions by the leadership team to agree upon actions for improvement and tangible business results. Such actions may involve including customers in meetings to review the existing portfolio of programs, projects, and operational activities, to determine whether changes in the prioritization model are needed, or to decide whether customers should be part of the governance boards or oversight groups on key programs and projects and part of the decision making team for go/no-go decisions at gate reviews and overall program and project performance reviews.
Align the Organization’s Strategic Goals to Those of Its Customers
As the organization becomes more involved in a customer-centric approach, data on the customer’s strategic goals should be gathered, typically by someone in marketing or in the PfMO. These data are then part of the customer analytics in the knowledge transfer system. At a minimum, they are useful for review by those who will be working with each customer on future opportunities.
A team of sales, business development, marketing, and portfolio representatives then should analyze these customer goals and the data that have been collected to see if they are ones the organization can support. This analysis also should note ones that cannot be supported given existing resources. The objective is to see whether the organization should align its own goals with those of its leading customers and to determine the benefits in doing so. Benefits include a greater emphasis then of a long-term partnership with the customers, achieving customer value and in turn business value, and having an improved ability to provide innovative approaches and solutions to customer problems.
Active Customer Participation in Portfolio Management
The next step is to determine the extent of customer involvement in the organization’s portfolio management process. Using the IBM classification, the Digital Pacesetters most likely would desire active involvement meaning some customer representatives who obviously are not competitors would be members of the portfolio review group. They would be part of the decision making process on new components to recommend, existing components to continue, and ones to terminate if they are not realizing expected benefits or are outdated because of work done by competitors or the need to use new technology to have sustainable benefits than when they first began. They also would be part of the optimization process to rank initiatives by priority. Assuming the portfolio group meets monthly, customer membership would rotate on a six month basis with active customers receiving information about decisions made.
Involving Customers on Governance Oversight Groups
Customer involvement also is recommended as part of membership of program and project governance oversight groups or boards. An organization considered as a Digital Pacesetter would have such a process in place, while a Traditionalist would use this approach as part of initial steps to further customer engagement. The customer representative would be actively involved, not an invited representative, and would participate in decisions made. As well, if the program or project team had some unexpected complexities, and requested a meeting with the governance board to brainstorm alternatives to consider, the customer’s representative would be expected to attend. When the program or project manager escalated issues to the board for resolution, customer representatives would be involved, recognizing there is an atmosphere of cooperation, and they may have technical expertise to help. Further, the customer representatives would have access to the program or project’s management information system to see status at any time.
Changing the Communications Paradigm
The communications paradigm also shifts from one in which the customer receives reports at pre-determined intervals in certain formats to one in which real-time data are available. Meetings are not held only at specific times, but customers are part of the team, working collectively to resolve issues as they occur for mutual benefit rather than “show and tell” presentations. Customer feedback is sought on a regular basis, not just at the end of a program or project as final lessons learned are collected. Customers can view the data to see whether it was analyzed and used. The organization’s market projections are shared with its customers, and joint decisions are made on needed investments in new technology or in research and development. It may be the customer provides key subject matter expert support to certain teams for a limited period of time rather than requiring the need to use external resources. As another example it may be the customer has access to technology that can benefit a program or project.
The Need for Organizational Agility to Enable this Trend to Be Realized
A static organization or one that practices a “business as usual” approach will not be successful. Alignment of the organization’s strategy with that of its customers is essential to position it for greater growth and overall profitability. For example, a leading food company executive explained if its programs and projects were discontinued, it may not be immediately noticed in the market, but within a month or definitely within a quarter, it would not be the market leader. Change and complexity continue to accelerate to a degree that a program or project that appeared it would result in significant benefits six months ago when it was officially approved and resources were assigned may no longer be a viable option. Each organization requires a flexible approach with continual assessment of its goals and objectives, and changes to them cannot be limited to an annual review. The roadmap, a common tool suggested in portfolio and program management, continually changes as well, and these changes are communicated internally and externally.
Ensure Strategic Initiatives are Visible to Customers
Each customer requires visibility into an organization’s strategic initiatives. As suggested earlier in this paper, the organization should be abreast of the customer’s strategic objectives; the reverse also is needed. Customers have too many choices and require common values with the organizations they select for products and services. Transparent decisions, as to why certain strategic initiatives are pursued over others, are ones customers will embrace if the customer is considered as a true partner in solution development. If close customer collaboration is the norm, when strategic initiatives change, the customers are not surprised as they were part of the decision to do so or were informed before they were publically available. A focus on continuous improvement that permeates all areas of an organization leads to a greater acceptance of the changes that are occurring and why these changes are needed.
Use the Customer Perspectives to Set an Organization Apart from Others
A customer perspective additionally can set one organization apart from others in the same market area. Assume as an example, a small to medium-sized company has the resources, human, technology, and capital to pursue one of two projects. The first project is one in which the organization integrates its legacy systems with its project management information system such that accounting does not lag for at least a month in reporting up-to-date financial status on projects, and the human resource system has up-to-date competency profiles on staff members and resource availability. People in the organization would be able to access this system with a single point of entry, and it would be easy to use and maintained. The benefits of this project include greater efficiency in resource assignments, improved status reporting with useful metrics for forecasting, greater effectiveness in information systems with limited complaints, and improved overall staff morale and enhanced productivity.
Project two is one suggested by an existing customer with whom the company has worked for many years. This project is one in which the company will move into a new market at the request of the company even though it will require hiring staff with expertise in other areas or using vendors and use of unproven technology.
The executives’ decision is to accept project two, recognizing the customer’s project is more important, and if not selected, the customer would look elsewhere regardless of its long-standing relationship. This decision is one that is made quickly in an existing customer-centric organization as active customer engagement is the norm.
Enable a Customer Approach to Reduce Complexity
Different customers are treated differently as their expectations and requirements are different. The customer-centric approach with a portfolio of customers and a customer engagement plan that is prepared, followed, and updated can simplify complexity on complicated programs and projects. Consider the following scenario: “It has become apparent that the program or project is no longer to deliver what the customer needs” (PMI, 2014a, p. 39). While a number of possible actions to consider are presented with a customer-centric approach communications with the customer in person if possible would be held, work would be done jointly with the customer to determine the path forward, alternative approaches would be discussed, and requirements would be reassessed along with customer concurrence that the change in outcomes was accepted (p. 39).
To further reduce complexity, requirements can be prioritized recognizing which ones can be met quickly and delivered to the customer to show some “quick wins” and others that require more time. For the latter, alternatives can be considered to focus on those with high improvement potential or ease of implementation.
A Mutual Focus on Successful Strategic Initiatives through Knowing Sharing and Transfer
Customer centricity implies successful strategic initiatives for both the organization and the customer. By working together, both organizations may be able to enter new markets, achieve competitive advantage, and increase their business base.
For success, barriers between the organizations must be removed, recognizing customers do not have to follow a chain of command approach in talking with people in the organization, such as first talking with an account manager, but instead can talk with anyone on the program or project team. This communications approach can be part of the customer engagement plan, which also can then show others that do need to be informed if a customer representative contacts them. It differs from a “knowledge is power” approach focused on the importance of the customer seeking insight from a program manager, a project manager, or a team member to one in which “knowledge sharing is power” is the norm. By use of social media and knowledge transfer systems between the organization and its customers, collaborative idea sharing, and discussion of alternatives will occur. Future initiatives can benefit from the knowledge transfer system to see how best to focus on opportunities and overcome any customer concerns early in the engagement.
Summary and Parting Thoughts
As Galbraith explains “the need for customer-centricity is not going away, and it is up to each company to determine the level of application—and hierarchical restructuring—required for success in this morphing marketplace” (2005, p. 6).
Are We Ready??
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© 2014, Ginger Levin
Originally published as a part of the 2014 PMI Global Congress Proceedings – Phoenix, Arizona, USA