The biggest challenge facing most companies today is bridging the gap between strategy and execution. This is why management trends such as Six Sigma, the balanced scorecard and corporate performance management have become so popular.
Yet the gulf between strategic planning and execution is best and most cost-effectively bridged through engaging properly with customers. The sluggish and stagnant economy worldwide; the loss of shareholder value on stock exchanges; the inability of analysts to determine the true worth of companies; all of these point to a gulf between articulated strategy and actual execution.
The burden is on CEOs to take the lead in customer management so as to restore their companies to health and wealth.
Doug Leather, CEO, Knowledge Factory
Yet the solution is readily available, it doesn`t cost much, and it`s common sense: it`s simply getting closer to your customers, understanding what they need and delivering on this.
Because it`s so simple, executives might reject it as overly simplistic, but the evidence clearly shows there is a correlation between the extent to which top executives are involved with their customers and the overall performance of businesses. Yet more than 80% of executives do not engage regularly with customers.
This was one of the key findings to emerge from State of the Nation III, the annual customer management survey conducted by UK-based QCi. Other findings were:
* Only 13% of senior management have regular contact with a broad range of customers.
* Two-thirds of senior managers do not give clear, visible leadership in achieving excellence in customer management.
* 63% of companies do not know how many high-value customers they lose.
* 75% do not know the reason why key customers are last.
* Customer satisfaction is often used as a hygiene measure to appease senior management.
As Larry Bossidy and Ram Charan state in their ground-breaking book, "Execution": "People tend to look at their businesses from the inside out - that is, they tend to get so focused on making and selling their products that they lose awareness of the needs and buying behaviours of their customers.
"Who is the customer? How does he buy, and why? What`s the need? How long will the need last? What is the competition doing? Is your value proposition good enough? Who is the customer`s customer? Or even the customer`s customer`s customer? His demands or problems are going to affect your customer. Many people look myopically at their primary customers and don`t pay enough attention to the customers who ultimately determine demand for their products."
The burden is on CEOs to take the lead in customer management so as to restore their companies to health and wealth. It is the area of most rapid, immediate and sustainable gain.
By contrast, many executives fill their - and their colleagues` - time with discussions on strategy, and meetings which remain firmly bound in the domain of theory. Time spent talking about sales strategy, product strategy and competitive positioning is no substitute for getting out on the road and finding out just what it is clients want; what it is that makes them happy or unhappy; and why they defect to competitors.
Such interactions, instead, are made the province of the marketing and sales departments.
Management needs to involve itself more directly in the actual identification, acquisition and retention of customers. Most companies depend entirely on their customers for their lifeblood - their revenue - so for strategy to be identified, developed and executed without a major customer element driven and owned by the executive team is to court failure.
Bossidy and Charan state it unequivocally in their advice to CEOs: "First, make sure you and your people really understand your customers: their needs and their buying behaviours. Know why they would prefer your products to others. Understanding customers is the base of business success."
All of this supports the contention that the quickest and shortest path between strategy and execution is the customer-centric path.
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