Determine Your Own Intentions

Transformational changes to a business need to be driven by customer needs, or they aren't worth doing. Can you tell the difference?

The first step in avoiding such outcomes is to make a strategic determination of a company’s intentions toward its customers. Does it seek to grow the customer base, or shrink it by eliminating less profitable customers? Does it seek a different type of customer, geographically or demographically? And the metrics -- are customer satisfaction and market share sufficient? Are the customer relationship management (CRM) systems that many enterprises put their faith to manage how such information is gathered and utilized failing or succeeding because such data is not effectively handled in a manner that impacts the business?

These are all increasingly important questions. Questions that require immediate answers early on - before management is in caught in back-peddling and damage control mode. 

If there’s an organization that knows about transformative metrics, it is General Electric, an incubator of process management improvements and executive leadership. CEO Jeffrey Immelt continued the transformative philosophy launched by his predecessor, Jack Welch, who is often credited with saying “if it can’t be measured, it can’t be managed.” So it’s no surprise that Immelt is constantly looking for suitable metrics to help guide the company’s transformation efforts:

“Every initiative needs a metric," Immelt said. "To find the right one, we studied about 30 companies. We looked at the percentage of sales attributable to products introduced in the past three years and maybe 15 other things like that. But when we brought those metrics back inside our culture, they didn’t fit. They might work for other companies, but at GE the only things that move the culture are ones that show up on our income statement. It’s just the way we were raised. We finally came up with organic revenue growth as the only output function that goes straight into the ledger. We believe we can grow two to three times faster than world GDP. We made it in 2005, and we’re going to make it in 2006. It’s good to have aspirational goals in a company like GE.”

Understanding the customer need not involve just numbers; in fact, today it must be more. Some companies have learned to connect with their “lead users.” This is a concept developed by Eric von Hippel, professor and head of the Innovation and Entrepreneurship Group at the MIT Sloan School of Management. Lead users face needs today that will be widespread in the marketplace months or years down the road. They benefit significantly by finding solutions to their problems, and so they tinker with a product to improve it.

If a company can connect with these lead users, it can often incorporate these innovations in future versions of its product or service. Such action has often resulted in development of a better product, further efficient service, and more satisfied customer overall. Under ideal circumstances, a lead user would share his or her insights and needs with the company so it could improve the product.

A transformed company develops the necessary management capabilities to create a comprehensive picture of itself today and where it wants to be tomorrow, discovers the activities that no longer make sense, brings on board new ideas, and creates the structures, processes and information to achieve all of this.

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Faisal Hoque is the founder and CEO of BTM Corporation. A former senior executive at GE and other multi-nationals, Faisal is an internationally known entrepreneur and thought leader. He has written five management books, established a non-profit institute, The BTM Institute, and become a leading authority on the issue of effective interaction between business and technology. © 2010 Faisal Hoque