Culture Sits Above Business Strategy
There is a general failure of retail leadership to adopt customer centricity. And that failure is directly correlated to a weak corporate culture. Companies tend to bypass corporate culture and jump right to business strategy, moving quickly to “how” we do the work, not “why.” The commonly held belief is “customer centricity is an economic solution to declining comp stores sales, lack of traffic and declining share price.” The failure to start with culture before jumping to a business strategy undermines the interdependency of both required for sustainability and long-term growth. And a strong culture will lead to customer centricity, the key to success in any retail business.
If culture is the heart and soul of the company, customer centricity is its life blood. Culture is created from a strongly held belief of purpose using core values to guide and hold everyone accountable to a central focus on serving both the employees and customers within communities. The people are the nucleus of culture and investing in talent is the best way to build a strong culture.
Customer centricity starts from the heart, as does culture. Together they can be commissioned to deploy empathy by walking in the shoes of the customers. The goal is to develop a deep understanding of customers’ needs, their life rituals and events in concert with their tastes and behavior. These insights must be considered first to develop a better, more informed strategic pathway to serving customers. A few of the best customer centric retail companies today are Patagonia, Amazon, Zappos, Apple, Disney, Nike, Lululemon, Nordstrom and Starbucks.
So, What Is Culture?
Culture is the social heritage of a group, organized community or society. It is a pattern of responses discovered, developed, or invented during the group history of handling problems which arise from interactions among its members, and between them and their environment. (Business Digest). These responses are considered the accepted way to perceive, feel, think and act within a culture and are passed onto new members through immersion and teaching. Culture determines what is acceptable or not, right or wrong, workable or unworkable. It encompasses all learned and shared, explicit or tacit, assumptions, beliefs, knowledge, norms, and values, as well as attitudes, behavior, dress, and language.
Culture is the central repository of a company’s existence and core philosophy. It is organic and an automatic response mechanism within the system of its history and values. Diversity and inclusion are the cornerstones of a sustainable culture. A healthy culture requires constant care and nourishment through the investment in developing people. Understanding who we are, what we stand for, who we serve and how we are organized ensures a sustainable future.
Decoding the Culture of a Customer Centric Retail Company
- Why are we in business? What is our position of intent? “Many organizations do a superficial job of articulating why they exist, settling for vision-exercises that lead to little more than catchy slogans and posters” (BCG).
- Who are we as a business? Among the many reasons for failure is unaligned employee consensus. Engrained beliefs, employee resistance to change and most importantly a lack of clarity from management that leads to cross-purpose results. All employees require an understanding of why they are the central cast members in the theater of customer experience. The company must be organized around this position to provide the employee with the tools and empowerment they need to be successful. Finally, a mind shift to collective core purpose, steered by values with clear principles, needs alignment at the Board and C level.
- Who are our leaders? What is our leadership stand? Cultural change cannot occur unless every leader is willing to change themselves for the greater good of the enterprise. Vision inspires and unites, bringing people together, forging alignment and common purpose. True leaders have a clear vision of the true north of the company.
- What are our external and external communications? Are they aligned?
I have witnessed both the failures and the successes of a customer centric company from the lens of a Chief Design Officer within a Fortune 50 enterprise. I have learned that a company remiss of a clear internal communications message will fail. Internal must be seeded within the belief system of its people before an external communication is launched. The failure to be clear will cause misinterpretation and result in a fractured culture. Unity of culture with business groups working in harmony, creates organic growth. In terms of external communications, companies that are struggling to be relevant often make the mistake of making public declarations and promises publicly they cannot keep. All it takes is a bad quarter or two and they make announcements that have a presumed cure. In a recent study, businesses that misuse the words Transformation and Customer Centricity in their earnings calls and their public relations communications, are the companies that fail the most in delivering against the promise. Further, those who say they’re transforming aren’t actually doing the hard work of changing the business. (The Navio Group and Loup Ventures).
- What is our compensation philosophy? The key to changing behavior is to change rewards and incentives. Retail companies are conditioned to sell rather than build relationships and provide expertise to employees to solve the customer’s needs. Companies in the midst of change must remember when trying to change behavior you are actually changing culture. These are the hardest things to change and a compensation philosophy designed to reward this behavioral change becomes the accelerant. If not, it becomes the deterrent. I have witnessed this failure first hand where we created new incentives and rewards for the field yet did not change how we bonus the merchant group to change the way we buy. We remained product centric and did not think first about end use and how to buy for experience-based solutions. The company must also become aware of how we are stronger when we link our compensation design with an educational program within a horizontal organizational plan. These co-dependencies work best when synced and are a must for behavioral change. Compensation designed collectively with organizational design fused with all corporate service functions becomes an integrated ecosystem in service of both the employee and customer experience.
- What is our organizational change plan? If the new compensation philosophy is the hand used for changing behavior, then organizational design is the glove used for changing how we go about the work. Destroy the silos and move toward a horizontally interdependent model. Create an integrated approach and work together across disciplines. This process holds us accountable to how we deliver positive outcomes. Integrating capabilities in a cross functional manner builds teamwork. This is a critical factor in delivering customer centricity.
- Do we know what people are doing with the products we sell? If we do not ask how a customer intends to use a particular product, then how can we serve and solve their needs and earn their trust? This is a fundamental pillar of customer centricity. Our goal is to become their trusted advisor by getting to know them rather than pushing products at them. This is a pull not a push, it is a move from transactional to experiential. This notion is counterintuitive to most retailers steeped in the conventional practices of the past. Stop trying to sell and start building relationships to earn trust.
- Do we use system thinking and holistic approaches? If our true north is providing the ultimate guest experience by building a relationship of trust – we need flawless execution. Shared vision and purpose, systems design and innovation with a forward-thinking, talent-powered team are required for the strategy to become reality. Design thinking facilitates the art of execution that can deliver customer centricity with a compelling customer experience across all channels. Design thinking is the intersection of the heart and the head. It is the unifying force of bringing market centered ideas to the audience it serves.. Consider how two groups within an organization under the baton of the CEO, the Talent Services Group, (CHRO) and the Customer Experience Group, (CXO) together become the delivery system for the strategy.
Customer Centricity by Design
The intent and spirit of customer centricity is to be in service of others. Customer centricity is culture combined with business strategy grounded in a common philosophy to serve customers delivered by employees through design thinking, creativity and innovation.
Understanding all facets of customer centricity will lead to an effective business strategy. These are the fundamental questions to ask:
- What is customer centricity?
- Why is this important to our future?
- Who is the customer?
- What are their unmet needs?
- How do we help solve these issues?
- What is at stake?
- What are we willing to sacrifice?
- How will our culture stand up to these challenges?
- What’s in it for me?
- Are we on this mission together?
If we do not have a collective consciousness about customer centricity, we become another statistic on the list of failures. In fact, 70% of transformation efforts fail due to employee resistance to change and management behavior (McKinsey). It is undeniable that culture and customer centricity are indelibly inter-related. If your culture is healthy, your business will reflect the vision and values of working in service to others.
New goals, clear roles, achieving the right results in the right way, creates behavioral change. This means everyone from the top to the line level. This is an investment not an expense which shifts our thinking toward long-term sustainable growth rather than a quick fix solution. We can have both but need to build change through vision and systems-thinking across all disciplines in a holistic manner.