A. What do we mean by Customer?

Way back in Part 1, we talked about the role of an organization’s mission and vision in establishing a “destination”. For management by objectives to succeed as an operating system, leaders need to clearly communicate the key objectives for the organization. Similarly, leaders of highly functioning organizations tend to maintain and reinforce a relentless focus on their “customers” and will often reference customers in their mission and/or vision statements.

I’m intentionally using quotation marks in that first reference to “customers”, because I think it’s worth taking some time to define the term, at least for this section of the course. When we hear the word “customer”, most of us probably think about an “outside” person, or organization, paying money for a good or service. That is certainly a group I intend to include in the concept of “customer”. However, for our purposes— at least when we’re thinking about culture, I think it’s important to broaden that definition.

First, let’s acknowledge that an organization has customers regardless of whether that organization  requires monetary compensation in exchange for the goods or services that it provides. In other words, the leaders of the best non-profit organizations that I’ve encountered think, and often speak, about their “customers”. In this sense, they are usually referring to a segment of people (or organizations) who utilize and/or directly benefit from the goods or service that the organization provides— whether they are paying for them or not.

A well-run public school, for example, often focuses on its students (and perhaps their parents) in the same way that a well-run private sector enterprise focuses on its customers. The same is often true for well-run churches, so-called “charitable organizations” and government entities. None of these groups directly charge customers for their services, but the ones who are successful tend to focus relentlessly on the individuals and groups benefiting from their purpose.

Another non-traditional example of “customers” may arise in a large or medium-size organization that has internal business units providing services to one another. Caterpillar’s Legal Department, for example, is comprised of lawyers and other professional staff who provide legal counsel and similar services to other affiliated organizations within the Caterpillar enterprise. They usually are not providing services directly to Caterpillar customers, but they think of the internal group to whom they are providing legal services as their customers (or clients) and bring a similar level of focus as you’d find from a private legal firm that contracts for money directly with more traditional customers outside their firm structure.

So, for purposes of this section of the course, when we refer to “customer” let’s just agree that term will apply to the individual(s) or organization(s) who most directly benefit from the product or service that an organization provides— whether or not that organization charges a direct fee and whether or not the customer is inside or outside the organization.

B. What do we mean by “customer focus”

Ok, in Section A above, I referred several times to the phenomenon of leaders in highly functioning organizations bringing relentless “focus” on the customer. Now that we’re aligned on the concept of “customer” what do I mean by “focus”.

Simply put, in considering almost every decision they make— and certainly as they are considering alternative solutions to problems— leaders of highly functioning organizations are always trying to determine which potential solution is best for the customer. As Ed Rapp says, “In any business, it all starts with winning through the eyes of your customer.”^[1] The same is inevitably true for organizations who don’t consider themselves as “businesses”.

C. Why is Customer Focus Important?

Just as it’s important that employees in highly functioning organizations actively seek out problems so that the organization can continue to improve, great organizations run toward and not away from negative customer feedback. Customer feedback is critically important to identifying problems that create organizational improvement opportunities, and problems that are creating significant negative experience for customers should get relatively high priority in any leader’s operating system.

Sometimes, focusing on customers can be more than an opportunity for improvement. It can be an existential requirement. Successful organizations provide the best possible solutions to their customers at the lowest possible cost. If they can’t do that, then both the organization’s customers and the organizations’ funding sources (if different from customers) tend to find better solutions and organizations that don’t maintain customer focus tend to disappear.

D. How can a Leader set the tone?

It’s fine to talk about finding solutions that positively impact customers but how is that done? I think there are two broad keys.

First, as a problem-solving leader, it’s important to have a deep understanding of your organizations’ customers. The more granular understanding you can achieve, the better, but at the highest level, you want to make sure you understand:

• How does the customer use the good/service you provide?

• How do they measure success?

• What are their expectations in terms of quality, cost and velocity?

• If they are incorporating your organization’s good/service into their own product, how do they do it and what do their customers expect in terms of quality, cost and velocity?

These questions are sometimes hard to answer. One way many organizations seek to gain these insights is to use every opportunity they can to gather feedback through formal surveys and other feedback tools. These types of tools can be very helpful and I’m always a bit impressed when, as a customer, I’m asked for feedback. However, I’m also often annoyed by it— especially if I don’t feel like my feedback is being heard and/or acted upon.

I would never discourage leaders from using surveys and formal feedback tools to gather insights and hone customer focus. At the end of the day, though, there’s no substitute for spending time with customers and hearing their input directly. Any chance you get to interact with customers of your organization, I highly recommend you do so and use the time to actively ask questions to better understand their business. Then, thank them and follow up by acting on the insights they provide.

The second key as a leader is to look for every opportunity you can to introduce the customer’s point of view. As I mentioned at the beginning of this part of the course, an organization’s culture is largely determined by the actions and habits of the leader. (Recall Ed’s observation that culture is about “setting the rules of the game and leading by example each and every day.^[2]”

With that in mind, as the leader of a problem-solving organization, it’s very important that you lead by example in learning about your customers, sharing that knowledge with your team members, and encouraging them to do the same. When in problem-solving meetings, ask questions such as:

• Does our customer have expectations related to this process?

• Do we have an alternative solution that meets or exceeds those expectations?

• What impact does this process/potential solution have on our customer?

• Is there a way we can make changes that will add more value for the customer?

• Is there a way that we can make changes that save money for our customers?

Once they observe this type of behavior from their leader, team members will start emulating it and you’ll see increased engagement and better problem-solving.

Reflection Questions

1) Have you ever been in a job or part of an organization (including sports teams) that utilized some form of documented standard work? How was it used? Were they good at keeping it up to date?

2)Can you think of a business or other organization that seems very focused on customers and creating a great experience for them?

3) How about a business that doesn’t create a good customer experience? If you were a leader in that organization, what would you do to bring more customer focus?

---

[1]. Rapp and Jain, p. 78

[2]. Rapp and Jain, p. 85.