Building profitable customer-centric strategies requires more than creating winning concepts. It also requires generating ongoing stakeholder commitment, capability and effective execution.
This final article in the four-part series by the Business Authors Leadership Alliance (BALA) shows how to develop a plan for leading and managing organizational performance to achieve your customer-centricity objectives.
You'll learn, step-by-step, how your company can accelerate progress on the road to success without running into “gridlock” along the way. We'll address the following:
- Uncovering assumptions that can get in the way of success
- Overcoming stakeholder resistance
- Generating commitment
- Focusing everyone's energy on what's really important
- Reducing risk so that you don't get blindsided by unexpected problems
As a reminder, BALA's process involves the following four phases:
- Identify key strategic customer-centric opportunities and challenges (see Part 1 by Michael Lowenstein)
- Focus staff innovation and creativity to develop solutions for these challenges (see Part 2 by Jeff Mauzy)
- Ensure and refine profitability potential of new initiatives (see Part 3 by Jim Lenskold)
- Lead and manage organizational performance so that the company can meet its customer-centricity objectives
Last week's BALA article covered Phase 3. We now present the steps in Phase 4:
Back to Midwest Telecom
Over the past three weeks, we've been discussing the case of a fictional company known as Midwest Telecom. This example has been compiled from several actual engagements spanning various companies.
The three previous phases of the BALA process (1) established business priorities, (2) used innovation techniques to develop top strategies to address these priorities, and (3) assessed the ROI and profitability potential of the top set of solutions.
For this article, we follow Midwest Telecom as it determines whether its organization can deliver on the proposed strategy and address how it will execute its selected strategy in a way that achieves its customer-centricity objectives.
Overview of the Process
There are numerous studies supporting the concept that business results are clearly linked to how organizations form and behave as social systems. The process for leading and managing performance is designed to provide you with increased perspective and insights about your organization's unique reality so that you can accelerate progress toward your customer-centricity objectives. It's based on six guidelines and principles that form the acronym UNLOCK:
- Understand the full challenge.
- Negotiate the buy-in of key stakeholders.
- Locate cultural advancers and blockers.
- Organize relevant priorities, goals and actions.
- Communicate credibly.
- Keep adjusting.
Because Midwest Telecom's leadership recognized that success was contingent on whether the organization could perform in new ways, it chose to collaborate with an external facilitator who had expertise in organizational behavior and strategic leadership for building this final phase of the leadership's strategy.
1. Prepare to bring customer-centric strategies to life
The first step of Phase 4 is to “Understand the full challenge” that your organization faces in executing the strategy. This is based upon the principle that every organization is unique and multifaceted. Drawing on multiple perspectives from a wide range of both internal and external stakeholders enables you to gain a more accurate picture of the range of issues that will need to be addressed.
To do this…
- Identify the issues and the participants to address them.
- Assess internal and external facets of your organization's reality that will impact successful execution.
- Probe for assumptions.
- Generate options to address these issues.
- Select the option that has the highest reward and the most acceptable level of risk.
In our example, Midwest Telecom already had a leadership team in place that was now in the final phase of evaluating two potentially profitable strategies for collecting customer information. Based on the profitability analysis conducted in Phase 3, team members initially defined their challenge to be that of establishing a system for gaining and using customer-insight information to retain vulnerable customers.
The strategy with the highest profitability potential would be launched for market trial the following month. The second strategy would be launched for market trial in three months, when budget would be available.
The team then turned its attention to determining if the organization was capable and willing to deliver results in a manner consistent with ROI projections. Through large and small group exercises that drew on earlier customer insight information, team members examined their assumptions about a variety of internal and external factors, including the following:
- Similarities and differences between their organization and others where this strategy existed
- The potential for resistance from internal and external stakeholders
- Other initiatives that could support or detract from the one under consideration
As the team members evaluated the evidence they had for their answers to questions, they discovered that one of their mistaken assumptions was that their organization would quickly make fundamental changes to their operations once they acquired customer insight information. As a result, the team realized that the full challenge of executing its strategy had two equally important components:
- Establishing an integrated system for gaining and using customer insight information to identify and retain vulnerable customers
- Developing the organization's capability and willingness to work cross-functionally in order to be able to achieve customer-centric performance
After generating and weighing options for moving forward, the group modified its original decision to launch two strategies in an overlapping manner. Instead, it concluded that the organization needed to focus and learn from executing one strategy before launching the second.
Although this modified solution could slightly impact potential profitability, the strategy team reached consensus that taking a more deliberate approach to introducing major change increased Midwest Telecom's chances for achieving its objectives.
2. Negotiate and maintain buy-in of key stakeholders
Before committing to detailed implementation plans, the next step for leading and managing performance is to “Negotiate buy-in” from the groups and individuals that influence and execute an organization's strategies.
This approach is based on the principle that organizations only accomplish that which is valued by those who hold power. The sooner you win stakeholders over to your side, the more likely it is that your customer-centric strategy will succeed.
To do this…
- Identify key stakeholders for the strategy.
- Determine mutual needs.
- Formulate a plan to negotiate their buy-in.
- Open negotiations and evaluate the level of commitment.
Stakeholders will buy into a strategy to the extent that they trust that they'll benefit in either the short-term or the long-term (preferably both). When you understand people's concerns, needs and desires, you're better able to leverage the positives and minimize the negatives.
As Midwest Telecom's strategy team discussed bringing its customer-centric strategy to life, several department heads expressed concern about the high level of resistance they would receive to working as cross-functional teams. The group agreed that department heads, as well as the head of vendor relations, would identify their stakeholders' interests and concerns about this new way of interacting. They would then work with the CEO and COO to formulate a plan for negotiating buy-in from each stakeholder group. The team would also evaluate the level of commitment from each area, and proceed accordingly.
3. Locate cultural advancers and blockers to customer centricity
While key stakeholders may be enthusiastic about a strategy, it can still run into “gridlock” during execution if it conflicts with your organization's culture. That's why the next step of the process of leading and managing performance is to “Locate cultural advancers and blockers” before committing to detailed execution plans. This approach is based on the principle that characteristics of a culture that advance one strategy or initiative may block another.
Organizational culture consists of all of the values, beliefs and practices that exist in an organization. It's the primary force shaping key strategic decisions and how things get done. Leaders need to take into account, however, that every organization has both a “formal” and “informal” culture that impacts performance.
The formal culture reflects everything that's official—the vision, mission and values statement, the organization chart, the operating procedures, and so on. The informal culture, on the other hand, reflects what really happens day in and day out. From how information gets shared to how decisions are made, the informal culture is just as prominent as the formal culture.
Because there are so many aspects to an organization's culture, the most effective way to work with it is to identify the particular aspects that are relevant to successfully executing your customer-centricity strategy.
To do this…
- Identify organizational performance needed for the customer centricity strategy.
- Locate cultural advancers and blockers to achieving that performance.
In the case of Midwest Telecom, the leadership had identified that the organization needed to work more effectively in cross-functional teams in order for the customer-insight strategy to succeed. Through individual and small group exercises, a number of advancers in the formal and informal culture were located. For example, one of the most prominent features was a sign on the wall that described the importance of customer focus. There were also a number of programs to help employees gain understanding about their customers, and the company's generous compensation package paid for performance over and above expectations.
The group also located a number of blockers in the formal and informal culture. One of the top issues was that departments were structured so that strong hierarchical silos had been in place for years. In those instances when employees tried to share information with each other, they were seen as being “traitors” to rival departments who might get a larger share of performance bonuses. The star employees were those who were most successful at reaching their individual goals, and many accomplished that by hording information and opportunities.
4. Organize relevant priorities, goals and actions
After completing the first three steps of Phase 4, the group now had enough information to put together an execution plan.
A. Find a “starting point” in line with your organization's reality
Based on the principle that organizations respond as much to their reality as they do their vision, the next step of the process for leading and managing performance is to “Organize relevant priorities, goals and actions.” This step begins with finding your organization's starting point.
The more that a starting point and its subsequent actions are in line with what the organization is capable and willing to do in the here and now, the more that stakeholders will see the relevance in its goals and act on them.
To do this…
- Identify and sequence relevant priorities, goals and action steps.
- Determine the fit of strategy with your organization's reality.
- Prioritize against other strategies.
- Probe for assumptions.
To find the starting point for its customer-centric strategy, Midwest Telecom's team generated a list of all of the goals and actions that it would need to take. When it finished the exercise, it narrowed down the list to be sure that all of the goals were necessary and supported the objective. Then, the team sequenced the goals so that it could map out a clear path from the current performance toward a customer-centric performance.
The team looked at the execution plan and assessed its fit with both the profitability potential and the organization's reality as team members now understood it. They were surprised to discover that their initial goals and actions were now focused on foundational steps, such as gaining stakeholder buy-in to working in cross-functional teams. However, they agreed that these early efforts increased the likelihood that subsequent steps of the plan would be executed successfully.
B. Shape communication
One of the most important parts of formulating your execution plan is ensuring that it includes ways to shape communication so that everyone's energy is focused on a common objective. The key is to “Communicate credibly,” as defined by your stakeholders. This guideline is based on the principle that each organization determines for itself whether communication is credible, and acts accordingly.
To do this…
- Identify objectives, audience and information.
- Assess current communication strengths and credibility killers.
- Draft communication plan.
Midwest Telecom's strategy team identified that it wanted to communicate to all of the company's stakeholders on an ongoing basis that it was serious about having the organization work in cross-functional teams to share customer information so that the entire enterprise would become customer focused. The team also wanted feedback on stakeholders' concerns and reactions, and a mechanism for them to provide suggestions.
When team members assessed the usual way that communication occurred around strategies, they realized that they would need to use a more diverse mix of channels to communicate credibly with stakeholders. Examples included meetings with customers and vendors, companywide and department meetings, intranet Q&A sessions, and a series of informal “hallway conversations.”
Also, on an ongoing basis, the CEO, COO and heads of functional areas agreed to regularly meet to address the challenges of operating in cross-functional teams to achieve customer-centric performance.
5. Identify milestones and checkpoints for progress
The final step in strategic planning is to “Keep adjusting,” which is based on the principle that an organization's reality changes continuously. This step consists of identifying major milestones and establishing checkpoints to manage risks and assess progress along the way.
To do this…
- Rank “Goals & Action” steps according to importance/risk.
- Ensure that the execution plan contains contingency steps.
- Design milestone and checkpoint evaluations.
- Conduct checkpoint and milestone evaluations.
In addition to checking for timeliness and completeness of goals, a good checkpoint or milestone evaluation includes ways to question if the right things are happening. It's also important to assess whether changes in internal or external conditions have occurred that require adjusting the plan. Customer-insight information provides the guideline for measuring whether the right things are happening.
Once Midwest Telecom's team had ranked goals and action steps according to their importance and risk, it set up a series of contingency steps for the problems that it could reasonably predict. It then designed frequent checkpoint and milestone evaluations, with the highest risk goals having the most closely spaced checkpoints. Through this process, the strategy team decreased the risk that any particular piece of the plan would go out of control without being detected and adjusted in a timely manner.
Bringing a customer-centric strategy to life often requires more changes than a leadership team may originally anticipate; however, the effort doesn't have to end up snarled in “gridlock.”
Working in harmony with the principles and guidelines of organization reality will enable you to minimize many problems, prevent others from happening altogether and accelerate progress toward your objectives.
Integrating this phase with the three phases previously discussed by BALA authors will ensure that your customer-centric strategy has the greatest chance of meeting your expectations for adding value to customers and to your corporation on a sustained basis.
The Business Authors Leadership Alliance (BALA) is composed of Michael Lowenstein, Jeff Mauzy, Jim Lenskold and Pamela Harper.
Continue reading "Building Profitable Customer-Centric Strategies: Leading and Managing Performance (Part 4 of 4)" ... Read the full article
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