Part Two: Migrating to a Customer-Centric Model
(I. Barry Goldberg, principal consulting partner of Matterhorn International, continues his six-part series on integrating customers into strategy to form a truly customer-focused company. Last month, Goldberg differentiated CRM and CRM strategy from enterprise strategy.)
Part Two of Six
This month's installment provides a framework for measuring capability in the core disciplines needed to operate a customer-centered enterprise. Before diving into the material, however, let me add a small disclaimer. There was a period early in the development of CRM as a discipline that reeked of snake oil sales. The idea was that if you invented the term, or had a way to make the concepts understandable, then you could claim that you invented the industry as well.
I remember one conference where no fewer than three consultants were arguing (in public) about who invented CRM. Well, I take pride in being an early adopter and thought leader but I certainly did not invent anything. The concepts introduced here are meant to take something unwieldy, complex and outside the normal management toolbox and make them clear and actionable. This is definitely not the only framework for describing a customer-centered enterprise--it is simply one that I have found useful with a wide range of clients.
There are four fundamental disciplines in which a company must have some level of mastery in order to become a customer-centric enterprise. It is most useful to think of these as strategic capabilities. This structure can also be applied to any enterprise change initiative; however, it is particularly useful for the construction of a maturity model and for enabling the transition to a customer-centered strategy. The four are:
•Leadership and Adoption--Cultural and strategic depth needed to execute on any enterprise initiative and emotionally mature leadership in the executive suite.
•Customer Information--An ability to capture, manage, interpret and exploit information about customers at a very granular level.
•Technology Delivery Systems--Technology architecture that makes customer information available in useful form both to planners and at the moment of truth with a customer.
•Organizational Effectiveness--Alignment and measurement of people to remove conflict from consistently excellent performance with customers.
Each of these core disciplines has both strategic and tactical implications. At a strategic level, each is required to move through the maturity model. Understanding the role that each discipline plays, depending on the initiative you are undertaking, is key to determining the upside potential and the level of risk to which your project is exposed. A CRM project that is laid over organizational, process and technology infrastructure that is still in the product or channel stage will invariably be expensive and risky. Even when successfully implemented, these initiates rarely see return on investment beyond simple productivity lift.
Here is a simple example: A few years ago I worked with a financial services company that was having trouble with the adoption of its new sales force automation system. On the surface this was a simple problem. Most of the issues were in the Interface and Execution layers of the matrix. (The mistakes were classic early stage errors: insufficient training and support, a software tool that was better for the CIO than the users and an overly optimistic implementation timeline.)
However, when those challenges had been addressed, it was evident that there were deeper problems. The company operated on the assumption that lowering transaction processing costs was the highest and best use of company resources. Even the sales automation project was viewed as a way to manage more efficiency from the sales organizations. The issues that derailed this project were in the foundation and architecture layers, including flawed customer data from other systems, inappropriate use of sales activity information by sales managers and an unrealistic expectation of ROI.
By that criterion, the cost of fixing the problems that plagued the initiative's success was impossible to justify. It was not until we began to get the executive team to look at data from their distribution channel about the declining reputation and credibility of the organization that the company began to set investment priorities based on criteria other than efficiency.
I have found it very useful to work with a migration/maturity model in looking at an organization's ability in the core disciplines. A migration model is created by setting benchmarks (usually customized by industry) in each of the core disciplines, measured by observable behavior. Although such a model is arbitrary, depending on the baseline values used to create the maturity benchmarks, the structure is valuable to assist executives in understanding the relationship between investments in each of the disciplines.
I worked once with a tire chain whose president was very clear that customer experience was its only sustainable advantage. The nature of the business, and a single channel of distribution, guided the company's investments to be stronger in the organizational effectiveness and training area (by percentage) than in the area of technology development. In contrast, a direct marketer of telephone equipment to mid-market businesses required a higher investment in data integration and delivery technology.
Role of Executive Leadership
Ultimately however, the defining criterion for any organization's ability to migrate to a customer-centered model is found in the executive suite. Do the senior-most executives have the ability to lead an enterprise change this profound? Will they make funding decisions based on customer priorities--even if those decisions have a negative impact on earnings this quarter? Do the sponsoring executives understand the parts of the initiative that they cannot delegate? More than any single factor, emotionally mature leadership and an ability to facilitate enterprise change are the keys to allowing investments in CRM initiatives mature to their fullest potential.