A Business Technology Place

Customer relevance – three key principals

How do you stay relevant to your customers? It’s an important question to answer, but I think it’s often lost in the shuffle of budgets, business cases, reports, and deadlines. Staying relevant to customers is part of the life blood that sustains any organization. Quite simply, if an organization doesn’t produce products that are important and provide value to its customers then the organization will cease to exist. We can talk about management and finance strategies all day, but unless a customer is demanding a business transaction, there is no business.

How do companies that stand the test of time stay relevant? What characteristics do they have? What are their defining attributes and actions? I looked at a few examples to see what kind of patterns I could detect. Not surprisingly, what I found centers around the ability to change, staying focused, and sticking to a core purpose.

Be willing to change

Toyota has a proven track record of top ranked sales in the United States spanning many years. They accomplished this despite a classification as a foreign auto-maker. How are their sales so strong each year and do they maintain relevancy to the US market? One way to answer this question is to look at Toyota leaders. Hiroshi Okuda has over 50 years of service with Toyota. He served as President in the late nineties and currently serves as Chairman. Leadership studies on Mr. Okuda show that he was an advocate of change within Toyota. Under his presidency the company reduced its product development time (concept to market) for a vehicle from 27 to 18 months. While reducing cycle times doesn’t mean that a company remains relevant to its customers it does enable a company to change quickly to match the needs of its customers. A primary example of this is the demand for hybrid vehicles. Okuda recognized a potential need for hybrid cars before the market demanded them. He enabled development of the engine technology necessary for hybrids before his competitors and was thus able to meet the demand of the market place.

In 1991, IBM reported $10.1 billion in revenues associated with service. Service isn’t how IBM became IBM. Today, I looked at IBM’s 2009 annual report, and found this in their strategy section:

Shift the business mix to higher-value software and services

For the year 2009, IBM’s earnings report shows $55 billion in revenues associated with Global Business and Technology services. That amount of increase and growth doesn’t happen overnight, but it does show a willingness to change and to grow where customer demand exists. Yes, I think relevancy is tied to an acceptance of change.

Be customer focused

When I think of customer service and awards I think of Southwest airlines. My first thought was the lower fares help to keep their customer base loyal and happy. But a recent study cited in USA today indicates that there is no correlation between what passengers pay for flights and their satisfaction with an airline. The study indicates that customer satisfaction is better correlated to newer planes and a focused concentration on service. Southwest understands that a determined approach to be customer focused maintains their relevancy to customers. Their customers reward them with the business and with the highest rankings in customer satisfaction surveys year-after-year.

Stick to your core purpose and mission

I use to think company purpose, mission, and vision statements were fluff. That has changed over the years as I have more closely examined business principals and results. It’s been well documented that high performing organizations are those that stick to their core mission and don’t spread too thin. If you haven’t read Jim Collins’ books Good to Gread and How the Mighty Fall, I encourage you to do so to get extensive research and guidance on this topic. One quote that I recorded from Jim’s books on this was from George W. Merck. In a talk at the Medical College of Virginia at Richmond on December 1, 1950, Mr. Merck said “We try to never forget that medicine is for people. It is not for profits. The profits follow, and if we have remembered that, they have never failed to appear.” You see, Mr. Merck understood the principal of staying relevant. For his company it was about the medicine that people needed. It wasn’t about the money his company made. The money and profits were the by-product that he needed to maintain and operate the business for employees and stakeholders. Oh yeah, Merck has made it’s share of money over the years.

What do you say? How do you maintain relevancy to your customers?