When running a business division or even an entire company, there is constant friction between being customer focused and being process focused. It’s a constructive friction that often swings like a pendulum strongly in one direction or another, due to changes in customer expectations and end-market conditions.
Yet industrial gas companies must balance both to successfully serving any end market. This article will discuss the attributes and value of being customer vs process-focused and recommend some best practices to consider when trying to balance both approaches. Let us first define a few terms:
• Customer focus is a way of doing business that puts customers first, making it a priority to provide an exceptional customer experience at every stage of the customer journey. It builds customer satisfaction and loyalty, which leads to increased profits and competitive advantage.
“Methods, tools and approaches developed back then still have significant impact on how we practice today.”
Truly customer-focused organisations identify their most valuable customers and ensure their satisfaction.
• Process focus is when processes are consciously used to achieve business results, or in other words, when leadership leverages processes as a strategy to drive business outcomes. Beyond improving efficiency and potentially lowering a company’s cost to serve, it also creates a more engaged and involved workforce, as employees are able to utilise their problem-solving expertise and improvement tools to improve their processes to meet customer requirements.
Let’s be clear, whether your company is customer or process-focused, customers must be considered extremely important or you will not be in business very long! However, the strategy and tactics that a company uses to attract, serve and retain customers will leverage aspects of both approaches. So, maybe a more accurate term may be customer or process ‘leaning’. Nonetheless, let’s go a bit deeper into exploring the history and attributes of each approach, and then discuss how we can balance them for company success.
The concept of being ‘process-focused’ has been around for a few centuries, however, it wasn’t until the twentieth century and the birth of mass manufacturing that ‘process thinking’ really started to catch on. Methods, tools and approaches developed back then still have significant impact on how we practice and view process excellence today. A few examples include:
• Ford – The first company to install a moving assembly line process, thus spawning modern-day mass production and paving the way for a new kind of thinking about processes
• Bell Labs – Credited with bringing the world many groundbreaking technologies, this company laid the foundation for Statistical Process Control and later, Six Sigma
• Toyota – Developed a deeply entrenched cultural and management philosophy that focused on continuously improving the way work is carried out, looking for faults in the system/process rather than people
• Motorola – Invented Six Sigma, a statistical method for process control and improvement, in order to improve the quality of its products
• GE – Under former CEO Jack Welch, GE popularised the use of Six Sigma in business operations and offered a model for deployment in the corporate environment that almost everyone wanted to emulate
• Amazon – This online retail giant illustrates the modern-day collision of excellent processes with powerful and well-designed software, blending the online virtual world with the real world.
“The tension between customer and process focus is equally felt within the industrial gas industry …”
Although these companies were significant in helping build the foundation for a process-focused organisation, they were also focused on the customer. For example, Henry Ford introduced the world to process thinking, but his primary motivation was building cars that were more cost-effective and affordable for customers. So, yes it is important to be process-focused but there is a need to remain attentive to the customer. Some key elements of being process focused include:
• Strategy – Focuses not just on leveraging process for business results but on how processes are used to achieve those results. There is clarity on the key processes that provide competitive advantage, and the company invests in improving those processes along with customer-driven initiatives that make a difference to the company
• Structure/organisation – Organisations are structured around processes or value streams and have well defined ownership. Process management and improvement capabilities (for example Lean, Six Sigma, BPM) are embedded across business units and functions – not confined to one central process team. Performance gets measured through metrics around efficiency, effectiveness and collective agility
• Culture – Employees are trained to utilise tools such as LEAN and process thinking for solving day-to-day problems and decision-making. Employees are aware of value creating, enabling and support processes that operate in the company, and the importance of customer satisfaction in executing those processes
• Customer – Both internal and external customers are valued, but external customers are more important. There’s a focus on meeting the process goals, which at times could conflict with functional goals.
Amazon presents a great example of a company that had a great idea and processes but understood that the customer was most important. Two years after they launched the company and were successfully selling books online, Barnes and Noble (B&N) launched their online website to compete with Amazon. At the time, B&N was ~50 times larger than Amazon. Amazon CEO Jeff Bezos’ message to his organisation team at the time was “… don’t obsess over this big competitor that we just got … just stay focused on our customers and we’ll be fine.”
His mantra ever since has been, “Whatever the actionable distraction is, your response to it should be to double down on the customer. Satisfy them … and not just satisfy them, delight them.” The rest is now history.
The tension between customer and process focus is equally felt within the industrial gas industry, and the companies that come out ahead will be those that strike the right balance.
“At Messer, we are always looking for the right balance between customer focus and process efficiency, ultimately with the end goal of most effectively serving our customers,” said Chris Ebeling, EVP, Sales & Marketing, Messer Americas. “This can be a challenge because each customer may value different aspects of the product and service offering differently. At our company, success means deeply understanding each customer’s needs to enable effective segmentation and an optimal level of customer service.”
The concept of being ‘customer focused’ has not been around as long. Up until the late 1970s (or early 1980s), US manufacturers and sellers maintained the ‘upper hand’ over their customers. Then an onslaught of global competition, especially from Japan, exposed the ‘lesser’ quality of many domestically produced goods and services, customers had new choices about how to spend their money – and they gained a significant measure of ‘power’ in the marketplace, forcing companies worldwide to pay more attention to quality and to customers.
From that point forward, the concept of being customer-focused continued to evolve and expand rapidly, due to the advent of the Internet age, the creation of tools/metrics to measure customer satisfaction/loyalty/value, and the advance of computer platforms to help companies collect and manage information on customers. Some of the early adopters who paved the way were companies such as:
• Dell – One of the first companies to realise the power of online marketing and its capability to provide deep insight into the customer, which led to enabling customers to customise/buy computers online
• Amazon – One of the first online retailers to add user reviews with a rating scale for products, now considered the most effective social media tactic for driving sales
• Harrah’s Entertainment – Created one of the earliest central repositories of customer information across all its properties, enabling it to have a single customer view of all activity, which many companies are still striving to accomplish today
• Netflix – One of the first companies to use data and analytics to build a recommendation engine that assisted them in understanding customer preferences, before data and analytics were in vogue.
These companies were significant in helping build the foundation for how companies can be more customer-focused, but these companies all had a strong process foundation that enabled them to be successful. The Netflix journey is a great example. It started out as a DVD distribution company competing against ‘bricks and mortar’ DVD/Video rental companies like Blockbuster. Over their first decade, it built an impressive core competency in logistics and distribution processes with over 50 regional warehouses to distribute the DVDs to the company’s customers. This process competency and business performance enabled it to gather more and more information on its growing customer base and use it proactively to serve customers better.
Its solution was a recommendation engine that predicted the customer’s pattern of request, based on collecting the most detailed data possible. This solution enabled Netflix to be the best at knowing its customers on an individual basis. As the market shifted from
DVDs to streaming video, it took the recommendation engine to the next level and continually sharpened its accuracy, as customers used its platform on a real- time basis. And again, the rest is history.
Some key elements of being customer-focused include:
• Strategy – Every team member listens to customers and is aligned on the goal of delighting the customer, which leads to building products/services that meet customer needs. It is a core value for everyone (sales, marketing, customer service, operations, IT, procurement, finance, HR, R&D)
• Structure/organisational – Companies (or portions thereof) are organised around customer groups or market segments. There are individuals who have clear accountability for customer success and experience improvements, and they implement tools/approaches that create the desired customer experience
• Culture – Leaders put customers ahead of everything else, even if it means canceling important meetings, revising schedules, sacrificing holidays and occasionally giving up profits. Every person in the organisation understands the importance and value of customers. Employees are encouraged, empowered and given the right authority and confidence to make on-the-spot decisions for customers, and they are provided the best tools to do their jobs.
Although there are many more elements of being customer-focused, the list above provides many of the important characteristics and is an easy way to assess your level of customer focus.
“Listening carefully to our customers is extremely important to Messer,” Ebeling said. “Many solutions that are now being requested are a result of an end use customer placing new demands on our direct customers. We strive to help our customers succeed by providing solutions that enable them to meet their customer requirements.”
Balancing customer and process
Whether a company is customer or process ‘leaning’, it is often a strategic decision driven by demands of the customer-base, end-market changes or even changes in company leadership.
“Listening carefully to our customers is extremely important to Messer …”
As with many business strategies, the best answer is one of balance and priority. In this case, companies need to do aspects of both, so it is not customer or process, but customer and process. All of the Tier One industrial gas players, have implemented elements of both customer and process focus to align with their specific business strategies. For example, most (if not all) have organised portions of their organisations (sales, marketing, customer service, innovation and applied R&D) around customer or market segments, while other portions of the company are functionally or process-driven. This blended approach is a little more challenging for Tier two players or independents, due to fewer resources and scale availability. Below are top tips and best practices to help:
• Clear strategy – If you are operating in the industrial gas space, you have
a customer-focused orientation or you wouldn’t have survived this long! So, whether you need to ‘tweak’ your customer emphasis or add a bit more process discipline, it starts at the top with the CEO and entire C-suite. Articulate your change and make it part of your company’s philosophy in a clear and easy to understand list of core values that your company intends to uphold at all times.
• Organisational/culture – Companies can’t win without a workforce and structure that’s completely aligned with its business strategy. And to create a culture aligned with that strategy it helps to support it with facts, data and resources. Caterpillar, the world’s leading manufacturer of construction and mining equipment, has Customer Experience Champions throughout the company that spearhead initiatives and work with employees to get everyone on board and assist with key initiatives. You can’t fully achieve a strategy unless the majority of your organisation truly believes in its impact and benefits
• Metrics/KPIs – Peter Ducker famously said, “If you can’t measure it, you can’t improve it.” Typical balanced scorecards have financial and process-driven metrics of performance, but few have true ‘customer-focused’ metrics that address speed, ease of doing business, because it is hard! Identify and measure those customer success activities/investments
and their impact on business performance. For example, consider measuring growth in customer spending across multiple channels, since converting a single-channel customer into an omni channel buyer can increase the customer’s average spend by 10-20%
• Technology/infrastructure – In many respects, customers are viewing enterprise platforms, as well as mobile, web and other electronic interaction capabilities, as ‘table stakes’. A.T. Kearney data confirms that when companies provide a personalised, seamless experience, they generate average revenue growth of 8.1%, twice the rate of competitors with less- developed digital platforms. Parker Hannifin, a global leader in motion and control technologies, continually improves its digital offerings and omni-channel experience helping it to build and maintain relationships.
Determining how to balance both customer and process is truly a bit of an ‘art’. In reality most companies desire to be more customer-focused, but either leadership changes, economic conditions, or changes in end-markets influence the impact of process focused initiatives. According to KPMG, 88% of CEOs are concerned about customer loyalty, realising that mastery of the customer agenda is essential. As an industrial gas player, it is critical to not only be customer-focused but underpinned with a strong process structure that can both effectively and efficiently aid you in delivering a customer experience that differentiates you from others.
“The balancing act is constantly evolving,” Ebeling said. “As we see now with the Covid-19 pandemic, new customer requirements are emerging at a fast rate, requiring companies to constantly shift between customer and process focus to adapt to customer needs and market dynamics. We anticipate that as technological developments continue to accelerate, rebalancing these sometime opposing forces will happen at a faster pace.”
This is the first article in a series that looks at the challenges of balancing ‘customer and process’. Subsequent articles will go deeper and provide more specifics on how you can achieve this delicate balance more efficiently.